Households turn more optimistic on inflation, survey shows

ISTANBUL

Inflation expectations diverged across sectors in October, with households and businesses becoming more optimistic about the inflation outlook while market participants turned slightly more cautious, according to surveys released by Türkiye’s Central Bank on Oct. 23.

The bank’s Sectoral Inflation Expectations survey showed that 12-month-ahead inflation expectations rose by 0.19 percentage points from the previous month to 23.89 percent among market participants, while declining by 0.70 points to 31.8 percent for the real sector and by 1.85 points to 43.75 percent for households. The share of households expecting inflation to decline over the next 12 months also edged up to 16.56 percent.

A separate Household Expectations Survey indicated that consumers continued to see fuel and energy, followed by food, as the product groups recording the strongest price increases. The share of respondents citing fuel and energy among the categories with the highest price increases rose by 2.7 percentage points from the previous month to 38.9 percent.

The survey also showed that gold remained households’ preferred investment choice, with 43.3 percent of respondents saying they would buy gold, up 0.3 percentage points from a month earlier. Real estate ranked second, with the share of respondents opting for a house, shop or land increasing by 2 percentage points to 35.6 percent.

Households’ expectation for house price growth over the coming 12 months eased by 0.33 percentage points from the previous month to 30.36 percent, while their forecast for the U.S. dollar/Turkish Lira exchange rate one year ahead rose by 0.96 lira to 56.86.

The Sectoral Inflation Expectations survey compiles 12-month-ahead consumer inflation forecasts from financial and real-sector experts, manufacturing firms and households. The Household Expectations Survey for October was completed by 3,152 households.

The survey results came a day after Citi said the Central Bank’s 100-basis-point rate cut to 36 percent reflected a carefully calibrated return to monetary easing, adding that policymakers appeared increasingly confident that underlying inflation was moderating. Citi forecasts inflation at 28.4 percent at the end of 2026, 21 percent in 2027 and 13.5 percent in 2028, and expects the policy rate to end this year at 35 percent.

HSBC Global Investment Research, meanwhile, forecasts inflation at 30 percent by the end of 2026 and 15 percent by the end of 2027. It expects the one-week repo rate to fall to 35 percent by the end of 2026 and 21 percent by the end of 2027.