The Central Bank of Turkey (CBRT) published data showing that inflation expectations of the population and the real economy for the next 12 months declined in November. This positive trend, reflected in a reduction in survey respondents' forecasts, was, however, offset by a slight increase in expectations among professional market participants. The latter now forecast annual inflation at 23.49% over the next 12 months, up 0.23 percentage points from the previous month.
At the same time, expectations of the real economy and households continued their downward trend. The real economy reduced its 12-month inflation forecast by 0.6 percentage points, setting it at 35.70%. Households showed an even more significant decline: their 12-month inflation forecast decreased by 2.15 percentage points to 52.24%. These data, at first glance, confirm forecasts of disinflation, that is, a slowdown in the rate of inflation.
Nevertheless, the increase in forecasts among professional market participants is alarming, signaling that inflation risks remain on investors' radars. This is also reflected in consumer confidence: despite the overall decline in inflation forecasts, the number of households expecting such a development next year has declined. The share of respondents predicting disinflation fell by 1.67 percentage points to 24.83% in November. This may indicate growing uncertainty regarding the pace and duration of achieving price stability.
Despite these nuances, Turkish Finance Minister Mehmet Şimşek emphasized the positive trend, noting on social media that, compared to the same period last year, inflation expectations for both households and the real sector have improved by an impressive 12 percentage points. This suggests a long-term positive trend, despite short-term fluctuations in expectations. The Minister of Finance announced a strengthening of economic policy, emphasizing that the decline in inflation expectations is a positive sign indicating the effectiveness of the measures being taken. Commenting on the latest data, Minister Şimşek noted that the government program launched in mid-2023 to combat inflation is beginning to yield tangible results, reflected in more cautious forecasts from both households and businesses. He expressed confidence that a further improvement in inflation expectations will act as a catalyst for moderating price dynamics, and that as inflation slows, more noticeable changes and a reduction in price rigidity will be observed. The Minister also emphasized that ongoing structural reforms play a key role in ensuring long-term economic resilience and maintaining price stability. As a reminder, inflation in Turkey fell to 32.87% in October, and the Turkish Statistical Institute's (TurkStat) expected consumer price index (CPI) report for November, which will be published on Wednesday, December 3, is highly likely to show a further slowdown.
At the same time, expectations of the real economy and households continued their downward trend. The real economy reduced its 12-month inflation forecast by 0.6 percentage points, setting it at 35.70%. Households showed an even more significant decline: their 12-month inflation forecast decreased by 2.15 percentage points to 52.24%. These data, at first glance, confirm forecasts of disinflation, that is, a slowdown in the rate of inflation.
Nevertheless, the increase in forecasts among professional market participants is alarming, signaling that inflation risks remain on investors' radars. This is also reflected in consumer confidence: despite the overall decline in inflation forecasts, the number of households expecting such a development next year has declined. The share of respondents predicting disinflation fell by 1.67 percentage points to 24.83% in November. This may indicate growing uncertainty regarding the pace and duration of achieving price stability.
Despite these nuances, Turkish Finance Minister Mehmet Şimşek emphasized the positive trend, noting on social media that, compared to the same period last year, inflation expectations for both households and the real sector have improved by an impressive 12 percentage points. This suggests a long-term positive trend, despite short-term fluctuations in expectations. The Minister of Finance announced a strengthening of economic policy, emphasizing that the decline in inflation expectations is a positive sign indicating the effectiveness of the measures being taken. Commenting on the latest data, Minister Şimşek noted that the government program launched in mid-2023 to combat inflation is beginning to yield tangible results, reflected in more cautious forecasts from both households and businesses. He expressed confidence that a further improvement in inflation expectations will act as a catalyst for moderating price dynamics, and that as inflation slows, more noticeable changes and a reduction in price rigidity will be observed. The Minister also emphasized that ongoing structural reforms play a key role in ensuring long-term economic resilience and maintaining price stability. As a reminder, inflation in Turkey fell to 32.87% in October, and the Turkish Statistical Institute's (TurkStat) expected consumer price index (CPI) report for November, which will be published on Wednesday, December 3, is highly likely to show a further slowdown.