Türkiye lifts 2027 inflation forecast to 21 percent as energy costs bite
Türkiye's central bank has pushed its inflation forecasts higher across the board, telling markets that energy costs and regional conflict will keep price growth above its earlier assumptions for years. The Central Bank of the Republic of Türkiye now sees year-end inflation at 29.5 percent in 2026, up from 28 percent, and 21 percent at the end of 2027, a six-point jump from the 15 percent it projected in August.
Governor Fatih Karahan announced the revisions at the CBRT's İstanbul Financial Center premises while presenting the year's fourth and final Inflation Report. The bank also lifted its 2028 projection to 13.5 percent from 9 percent and set a 9 percent interim target for the end of 2029, before inflation settles near its medium-term goal of 5 percent. It was the second increase to the 2026 forecast in three months.
Karahan attributed the revisions to the regional conflict, expectations that energy prices will stay elevated for longer, higher import costs and a stronger food-price outlook. He said the conflict's impact had proved more persistent than expected, limiting the improvement in inflation expectations the bank had assumed. Crude oil and natural gas prices rose significantly in September and October, and although some geopolitical risk premiums eased in November, energy prices remained above both the previous report's assumptions and pre-conflict levels.
The strain shows in the numbers. Annual energy inflation reached 51.4 percent in October, and Karahan said energy prices have risen about 43 percent since February, against a 17 percent rise in underlying inflation. Headline consumer inflation stood at 29.77 percent in October, little changed from 29.62 percent in September, though the bank's broader underlying measure eased to an annualised 23.7 percent. Karahan said that gap suggests headline inflation could move toward lower underlying rates as supply-side pressures fade.
Policy stays tight. The Monetary Policy Committee cut the one-week repo rate by 100 basis points to 36 percent on October 22, and Karahan repeated that the bank will hold its restrictive stance. "We will decisively maintain our tight monetary policy stance until price stability is achieved," he said. The bank flagged downside risks from tighter-than-expected financial conditions or a sharper slowdown in domestic demand, but said energy and geopolitical risks remain dominant for now.
