Turkish inflation rises above expectations in January

• Consumer price index is up 4.8%
• Steepest rise is in healthcare
• Further price rises are expected

Turkish consumer inflation spiked well above expectations in the first month of 2025 as price increases were driven by hikes in health and food costs, slowing a run of inflationary easing. 

The consumer price index rose 4.8 percent in January on a month-on-month basis, taking annualised inflation to 30.65 percent, according to data issued by state statistics agency Turkstat.

The January rate of increase was more than five times that of either November or December, which were 0.87 and 0.89 percent respectively. 

The January total was above market expectations, as many analysts had predicted the CPI to increase by about 4 percent for the month. 

Even with the January increase being higher than any single monthly rise since last January, the overall inflation rate eased slightly from the 2025 year-end figure of 30.9 percent. 

Leading contributors to January inflation were food costs, healthcare and restaurant and accommodation services, which rose by 6.6, 14.8 and 11.1 percent respectively for the month. Another major cost increase came in the transport segment, where prices rose 5.3 percent. 

The rise in food and beverage costs was significant as that category accounts for just under a quarter of all consumer spending.

Offsetting these rises was a 4.6 percent fall in clothing costs and a below-average 4.4 percent increase in housing and utilities prices. 

Despite the government’s tight monetary policies, inflation remains stubbornly high, economist Mustafa Sönmez said, and further price increases are set to impact the CPI in future months. 

“While January inflation traditionally comes high, the issue now is what comes next,” he said.

“It is winter and power prices just went up so the question is more now about what will inflation be in February and March and how it will negatively impact the year-end target.”

The difficulty the government faces is that, even with the disinflation measures taken, key factors such as food and housing costs are hard to tackle due to supply side shortages, he said. 

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The higher than expected increase in the CPI may make it difficult for the Turkish central bank to maintain its cycle of interest rate cuts. 

The bank’s monetary policy committee lowered its benchmark one-week repo auction rate to 37 percent on January 22, the 100 basis point cut being less than forecast. 

In its statement announcing the reduction, the bank warned that the pace of disinflation appeared to be moderating, with inflation expectations and pricing behaviour continuing to pose risks, which in turn could impact the delivery of future rate cuts.