Turkish Central Bank raises inflation forecasts on Middle East tension

ANKARA

Türkiye’s Central Bank on Nov. 12 raised its year-end inflation forecasts, driven by war-related developments in the Middle East and elevated energy costs.

Annual consumer inflation is expected to reach 29.5 percent at the end of this year, up from the previous forecast of 28 percent, Governor Fatih Karahan said at a press briefing to unveil the bank’s fourth inflation report of 2026.

“Continued uncertainty over the course of the war and the expectation that energy prices will remain elevated for longer than anticipated in the previous report period had an upward impact on the inflation forecasts,” Karahan said.

The bank’s year-end inflation projections for 2027 and 2028 were revised upwards by 6 percentage points to 21 percent and 4.5 percentage points to 13.5 percent, respectively.

The forecast for 2029 remained unchanged at 9 percent, while the bank maintained its medium-term target of stabilizing inflation at 5 percent.

Karahan noted that weakening expectations for the normalization of energy shipments through the Strait of Hormuz and escalating regional tensions have driven oil prices higher, prompting upward revisions to oil price assumptions for both 2026 and 2027.

Karahan stated that food price assumptions were also revised upwards due to higher energy and transport expenses alongside the outlook for agricultural commodity prices.

According to the latest data from the Turkish Statistical Institute (TurkStat), Türkiye’s annual inflation rate stood at 29.77 percent in October, picking up from a near five-year low of 29.73 percent in September, while monthly consumer prices rose 2.58 percent, accelerating from 1.84 percent in September.

“We have built our forecasts on the assumption that the tight monetary policy stance will be maintained. Furthermore, we have also factored in the assumption that the coordination among economic policies will continue,” he added.