2024 inflation data and 2025 expectations

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Inflation, which refers to the continuous increase in the general price level and deeply affects economic balances, continues to be one of the significant macroeconomic problems in our country. 2024 was a year that will be remembered for the inflation rates that deeply affected Turkey's economic structure and the impact of these rates on the public. The inflation data announced by the Turkish Statistical Institute (TÜİK), the Inflation Research Group (ENAG), and the Istanbul Chamber of Commerce (İTO) showed significant differences both in terms of calculation methods and results.

The monthly data for December 2024 and the annual inflation data for 2024, published by the Turkish Statistical Institute (TÜİK) on January 3, 2025, also provide important messages for macroeconomic balances and expectations for 2025.

Whether inflation arises from total demand exceeding supply (demand-pull inflation), from the reflection of increases in production costs on prices (cost-push inflation), or from prices rising due to the expectations of economic actors that inflation will continue in the future (expectations-based inflation), it creates very negative effects such as deterioration in income distribution, a decrease in purchasing power, uncertainty in investment decisions, and social unrest.

Comparison of TÜİK, ENAG, and İTO Data

TÜİK announced that the consumer price index (CPI) increased by 1.03% in December 2024 and that annual inflation was 44.38%. However, ENAG and İTO announced higher rates than these figures using different calculation methods. While ENAG announced that the CPI increased by 2.34% in December 2024 and that annual inflation was 83.40%, İTO announced the monthly CPI as 1.74% and annual inflation as 55.27%.

These differences stem from methodological differences in inflation calculations and the frequency of data collection. While ENAG tracks daily price changes, TÜİK takes measurements at specific intervals over a broader basket of goods.

The Government's 2025 Inflation Expectation

In the Medium-Term Program (MTP 2025-2027) prepared by the Presidency of Strategy and Budget and the Ministry of Treasury and Finance, the government aims to strengthen macroeconomic and financial stability, maintain fiscal discipline, and ensure price stability by reducing inflation to single digits in the medium term. The government projects that inflation will be 17.5% in 2025, 9.7% in 2026, and 7% in 2027. However, when we look at the estimates and realizations of previous years, it can be thought that these estimates in the MTP are optimistic.

Perceived Inflation and Public Perception

While the TÜİK data announced throughout 2024 showed that official inflation rates were 44.38%, the 83.40% rate announced by ENAG supported the perception that perceived inflation is higher. ENAG's method, which is based on daily price changes, offers a more dynamic view compared to TÜİK's measurements based on a broad basket of goods. These differences have caused trust issues regarding TÜİK's calculation method and led to the questioning of economic policies by the public.

The significant difference between the data causes serious debates in the public and also creates problems regarding the reliability of the data. While the economic decision-making process for economic actors based on this data becomes difficult, the results of the decisions taken also lead to seriously unfair and incorrect decisions, especially for the fixed-income public who live on wages.

Radical Declines in Purchasing Power as a Result of Low Wage Increases Despite High Price Increases

In our country, where the official annual inflation rate is 44.38% and the perceived inflation is 83.40%, the 2025 minimum wage level was unfortunately set far below expectations despite the decline in real wages and the resulting decrease in purchasing power and deterioration in income distribution. The net minimum wage, which was 17,002 TL in 2024, increased by 30% to 22,104 TL in 2025.

On the other hand, despite high inflation rates, the raise rate for SSK and Bağkur retirees was determined at 15.75%, and the raise rate for civil servants and civil servant retirees was only 11.54%. It should not be difficult to predict the problems that workers will face in an economy where food inflation is over 60% and the increase rate that can be applied to rental contracts has reached 58.51% for January 2025.

TÜRK-İŞ has been revealing the living conditions of workers every month for 38 years with its "Hunger and Poverty Threshold" study. According to TÜRK-İŞ data:

? The monthly food expenditure amount that a family of 4 must make to be able to eat healthily, balanced, and sufficiently (HUNGER THRESHOLD) is 21,083 TL,

? The total amount of other monthly expenditures that are mandatory for clothing, housing (rent, electricity, water, fuel), transportation, education, health, and similar needs, along with food expenditures (POVERTY THRESHOLD) is 68,675 TL,

? The 'cost of living' for a single worker has also risen to 27,365 TL per month.

In this case, while the net minimum wage is currently only 4.8% above the hunger threshold for December announced by TÜRK-İŞ, it only reaches 32% of the poverty threshold. The minimum wage is only 1,021 TL higher than the hunger threshold for December 2024 announced by TÜRK-İŞ. When we consider that this minimum wage will be applied throughout the 2025 fiscal year, the gravity of the situation increases even further. The net minimum wage is expected to fall below the hunger threshold in the first quarter of 2025.

Conclusion and Evaluation

Wage increases set well below inflation are causing significant declines in the purchasing power of fixed-income workers, and it is estimated that this will lead to serious increases in the number of our citizens living at the hunger and poverty thresholds. This situation shows that low-income segments still face serious difficulties in meeting their basic living costs. Especially in an environment where food inflation is at high levels, the purchasing power of workers who have to make a living with a minimum wage or a fixed income is constantly decreasing.

The high inflation that marked the Turkish economy in 2024 has significantly eroded the purchasing power of wage earners and retirees throughout the year. It is predicted that this situation will continue to increase in 2025, making living conditions even more difficult for low-income segments of the economy. High inflation, the fact that wage increases do not meet these rates, and the rapid rise in living costs create a great social and economic injustice. Therefore, there is an urgent need, more than ever, for social and economic measures that will improve the situation of millions of our citizens who are struggling with high inflation, an increasing hunger-poverty threshold, and low purchasing power, in a period where the minimum wage has become the average wage.