Türkiye Revises 2025 Inflation Outlook to 28.5 Percent

(MENAFN) Türkiye has significantly revised its inflation outlook for 2025, raising the forecast to 28.5 percent in the newly released Medium-Term Program for 2026-2028, Vice President Cevdet Yilmaz announced Monday.

This adjustment marks an 11-point surge from last year’s projection of 17.5 percent, while the 2026 inflation target climbed from 9.7 percent to 16 percent. Inflation is now anticipated to drop into single digits by 2027, with a forecasted rate of 9 percent, further easing to 8 percent in 2028.

Despite these higher estimates, Yilmaz emphasized the government’s unwavering commitment to combating inflation. "Our program focuses on the fight against inflation. After the transition period, a continuous disinflation process has been in place since June 2024," he told reporters.

He highlighted that Türkiye has already achieved a notable reduction in inflation amid external pressures and cyclical challenges. "Inflation has fallen by a total of 42.5 points, demonstrating the impact of our tight monetary and fiscal policies. With improvements in inflation expectations and trend indicators, we expect the disinflation process to continue uninterrupted through September and the remainder of the year," Yilmaz added.

Along with inflation targets, the government outlined ambitious economic growth goals, forecasting GDP increases of 3.8 percent in 2026, 4.3 percent in 2027, and 5 percent in 2028, according to Yilmaz.

Türkiye’s inflation surged unexpectedly in August, nearing 33 percent annually, underscoring ongoing inflationary pressures. In response, the central bank aggressively raised its benchmark interest rate from 8.5 percent in June 2023 to 50 percent by March 2024. As inflation began to ease, rate cuts started in December 2024, lowering the benchmark by 250 basis points to 42.5 percent by March 2025.

However, political developments, including the brief detention of Istanbul Mayor Ekrem Imamoglu on March 19, triggered market volatility, forcing the central bank to reverse course. It sharply hiked rates by 350 basis points to 46 percent, halting the easing cycle.

The government’s latest forecast and ongoing disinflation efforts reflect the challenging path Türkiye faces in stabilizing its economy amid persistent inflationary pressures.

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