NEWS

Annual increases in Turkey’s consumer price index fell for the fifteenth consecutive month in August, reaching 32.95% ahead of the Turkish central bank’s upcoming monetary policy meeting later this month, according to the Turkish Statistical Institute.
Monthly inflation stood at 2.04%, mainly driven by higher housing and transportation costs.

Inflationary Pressures from the Services Sector

Core inflation — excluding energy, food, non-alcoholic beverages, alcoholic beverages, tobacco, and gold — rose 1.74% month-on-month, while easing to 33.00% year-on-year.
The largest annual increases were recorded in education (60.91%), housing (52.37%), and hotels, cafes, and restaurants (33.96%). On the other hand, the smallest increases were seen in clothing and footwear (9.49%) and communications (20.61%).

Producer Price Inflation Accelerates

Data showed producer price inflation accelerating in August, rising 2.48% month-on-month compared to 1.73% in July. The annual rate climbed to 25.16% from 24.19% previously.
Housing and alcoholic beverages provided the largest positive contributions, while clothing and footwear registered a monthly decline of 5.82%, partially offsetting the upward pressure.

Monetary Policy Expectations

The Central Bank of Turkey is set to meet on September 11 to decide on interest rates.
According to the market participants’ expectations survey, an additional 300 basis points rate cut is anticipated, which would bring the benchmark rate down to 40%.
Stronger-than-expected second-quarter GDP results provided further room for maneuver in monetary policy.

Stock Market Volatility Amid Political Developments

The Borsa Istanbul index came under pressure after a court ruling canceled the main opposition party’s congress in Istanbul. The index closed Tuesday down 3.6% at 10,616 points, while Wednesday’s session saw additional losses of nearly 2%.
Central Bank Governor Fatih Karahan emphasized that monetary steps would be reviewed meeting by meeting, with a cautious focus on inflation outlook and the active use of all policy tools if necessary.

Turkish Lira Under Pressure

The USD/TRY pair surged to a fresh all-time high of 41.36 on August 29, 2025, before retreating slightly to 41.16, marking a weekly gain of 1.3%.
This move highlights rising technical and psychological pressures on the lira, raising concerns over potential short-term reversals.
According to Point Trader Group Analysis, the pair’s ability to hold above the 41 level for three consecutive sessions signals a clear break of both psychological and technical resistance. This behavior suggests a potential continuation of upward momentum, despite risks of entering into an overbought phase.