Turkish inflation likely slowed last month, says survey

Turkish inflation is expected to have continued its deceleration for a fourth month in October, though officials focus more on other metrics to decide on the timing of an interest-rate cut.

Annual price growth probably fell to 48.3% in October from 49.4% in September, according to the median forecast of economists surveyed by Bloomberg. Monthly prices, the favoured measure of central bankers, are seen to have eased to 2.66% from 2.97%.

The statistics office will publish October’s inflation data on Monday. Seasonally-adjusted prices, also closely watched by policymakers, will be released the following day.

Monthly prices unexpectedly rose in September and reduced the possibility of an interest-rate cut before the end of this year, though some analysts still see room for one in December. Turkiye has kept the main borrowing rate at 50% for the last seven months, sitting out the start of a global cutting cycle.

After September’s worse-than-expected inflation data, the central bank tilted to a more hawkish stance and noted uncertainty over the pace of improvement.

A gauge for measuring Istanbul inflation showed Friday that price rises are higher in Turkiye’s most populous city than nationwide, with retail-price growth at 59.1% in annual terms in October, compared with 59.2% the previous month.

Another key indicator that policymakers will be looking at is services inflation, which has been a key factor in higher-than-desired prices in recent months. Finance Minister Mehmet Simsek said that if it weren’t for that, Turkiye would be closer to its targets. The central bank said that it expects improvement in the final quarter.

“Turkiye’s rampant inflation will continue its slide down, albeit at a slower pace. Bloomberg Economics expects the data due on November 4 to show that annual inflation retreated to 48.3% in October, down about a percentage point from September’s 49.4%. Further out, we see the rate approaching 43% by year-end,” says Selva Bahar Baziki, economist, Bloomberg Economics. Turkish Central Bank Governor Fatih Karahan will deliver the year’s final quarterly outlook on inflation on November 8 in the capital, Ankara. Officials are targeting 38% inflation at the end of the year, though markets expect it to be higher.

“The central bank is likely to reaffirm its commitment to a tight monetary policy,” said Tufan Comert, global markets strategy director at BBVA in London. “What is important for the markets is obviously the projections for 2025 and 2026.”