CBRT 'Sectoral Inflation Expectations' report: Inflation expectation declines after three-month rise

The Central Bank of the Republic of Turkey (CBRT) has released its sectoral inflation expectations report for September. According to the report, a decrease was observed in the inflation expectations of both the public and the real sector. Notably, the households' 12-month inflation expectation fell to 71.6 percent, a decrease of 1.5 percentage points compared to the previous month.

Inflation expectations had shown an upward trend since June, reaching 73.14 percent in August. However, as of September, this rise has halted and a decline has been recorded.

Inflation expectations for the real sector also fell significantly. In September, the real sector's 12-month inflation expectation decreased by 2.7 percentage points to 51.1 percent. At the same time, inflation expectations for market participants fell by 1.2 percentage points to 27.5 percent.

EXPECTATIONS FOR A DECLINE IN INFLATION ARE DIMINISHING

The proportion of households expecting inflation to fall in the next 12 months decreased by 0.6 percentage points compared to the previous month, reaching 29 percent. This data reveals that households' expectations for a decline in inflation are diminishing.

The gap between market participants and households regarding inflation expectations was recorded at 44.1 percentage points in September. In August, this gap was at 44.4 percentage points.

YEAR-END INFLATION FORECAST IS 38 PERCENT

As of the end of July, inflation in Turkey reached 61.78 percent. The Central Bank's inflation forecast for the end of 2024 is set at 38 percent, and 14 percent for the end of 2025. In the Medium-Term Program (MTP), inflation is projected to be 17.5 percent by the end of 2025.

These data are compiled from the 12-month annual consumer inflation expectations of financial and real sector experts, manufacturing firms, and households, obtained through the CBRT's Survey of Market Participants, the Business Tendency Survey, and the Consumer Tendency Survey conducted in cooperation with TurkStat. The CBRT has been publishing sectoral inflation expectation data since June.