Turkey lifts year-end inflation forecast to 28.4%

Turkey has increased its year-end inflation forecast to 28.4%, according to Vice-President Cevdet Yilmaz, who unveiled the country's medium-term economic programme for 2027-2029 on Sunday. The vice-president stated that inflation is expected to start declining again in the fourth quarter of 2026 and reach the new forecast by the end of the year.

This revised forecast is notably higher than previous projections. In the government's medium-term programme for 2026-2028, which was in place last year, they had predicted year-end inflation at just 16%. Under the new programme, inflation is anticipated to drop to 21% in 2027, 13.5% in 2028, and 9% in 2029.

Yilmaz attributed the upward revision of the inflation outlook to the ongoing war in the Middle East. He explained that the direct and indirect impacts of the conflict on inflation have been estimated at around seven percentage points by the central bank.

Turkey's annual inflation rate has been hovering above 30% since December 2021, peaking at over 75% in May 2024 before beginning to ease. Yilmaz emphasized that significant progress has been made in combating inflation, which remains the top priority of the economic programme. He noted that inflation, which had surged to 75.5% in May 2024, is showing a clear downward trend due to the implemented policies.