Turkey’s consumer price index (CPI) inflation officially stood at 34% y/y in July versus 35% y/y in June and 44% y/y at end-2024, the Turkish Statistical Institute (TUIK, or TurkStat) said on August 4.

It is not advisable to plan, price or draw inferences based on TUIK data. There is widespread concern about the reliability of Turkey’s official data series.

At 34%, Turkey remains at eighth place in the world inflation league.

The Istanbul-based ENAG inflation research group of economists, meanwhile, calculated an inflation figure of 65% for July, following its assessment of 69% for June.

Monthly indicator up

TUIK also posted a monthly official inflation figure of 2.06% for July after releasing 1.37% for June, 1.53% for May and 3.00% for April.

On July 24, when it revived its monetary easing cycle, the monetary policy committee (MPC) of Turkey’s central bank said that leading indicators suggested there was a temporary rise in monthly inflation in July due to month-specific factors.

Turkey’s government automatically hikes the special consumption tax (OTV/SCT) every six months via official producer price index (PPI) inflation.

In the coming months, TUIK is set to deliver further outcomes in the 1%s for the official monthly headline indicator.

Up to around 30% targeted for end-2025

On May 22, the central bank left its end-2025 official inflation “target” unchanged at 24% y/y in its latest quarterly inflation report. The upper boundary of the forecast range was also kept unchanged by the authority at 29%.

The central bank anticipated that the seasonally-adjusted monthly inflation figures would edge up a little in 1Q25 (due to wage hikes and new year price/fee updates) in comparison to the 2%s in 4Q24. The expectation is that the figures will fall below the 1.5%-level starting from 3Q25.

Central bank governor Fatih Karahan reiterated on May 22 that the seasonally-adjusted monthly figure would end the year at a little bit above the 1%-level.

For the diary, August 14

On July 10, the central bank said in a blog post that a $10 increase in the average Brent oil price, seen following price hikes that followed Israel’s military move against Iran in June, would add 1.2 percentage points to Turkey’s end-2025 inflation and $1.25bn to the 2025 current account deficit.

On August 14, the regulator will release its next inflation report and updated forecasts.

Three rate cuts ahead in September, October and December

On July 24, the central bank delivered a 300-bp rate cut, bringing its policy rate to 43%.

On September 11, the MPC will hold its next rate-setting meeting. As things stand, another rate cut is almost certain but the size of it is not certain, as the MPC indicated on July 24 in its latest statement.

October 23 and December 11 are the other remaining rate-setting meeting dates this year.

Rate cuts of 300bp in the next three meetings would bring the one-week repo rate to 34% while 200-bp cuts would mean 37% at end-2025.

As things stand, realisation will come in somewhere between 34% and 37% depending on the course of the official inflation releases.

Markets unflustered

In recent weeks, portfolio flows into Turkey turned positive and the country’s central bank reserves followed through on a recovery trend. Also, debt inflows have strengthened.

The USD/TRY pair is now in the 40s. The smooth nominal devaluation and real lira appreciation policy remains on track.

Another date for the diary, September 15

The finance industry has shown an interest in a trial concerning the main opposition Republican People’s Party (CHP) being conducted by the Ankara 42nd (Asliye Hukuk) Civil Court of First Instance.

The next hearing in this case will be held on September 15. The finance industry has indicated that Turkish markets will remain calm at least until then.

On June 11, bne IntelliNews noted: “A [government] seizure of the CHP or, in other words, the replacement of the current CHP management, is not something that can be envisaged for the near future.”

Do not, however, bet the farm on it. No one knows what President Recep Tayyip Erdogan is planning. Perhaps, even he is not sure what his next step will be. In the run-up to the September 15 hearing, he will keep a keen eye on moves made by CHP leader Ozgur Ozel.

Ozgur Ozel, a "good boy"

Istanbul Blog writes: Critics of the CHP, who say that the party is at the end of the day compliant when it comes to the ruling regime's moves to stop it becoming a real threat to the survival of the Erdogan administration, see Ozel as essentially a "good boy" within Turkey’s political system. In their eyes, he plays the role of the main opposition party's leader within well understood limits, thereby providing the regime with the appearance of some democratic legitimacy, while not posing a threat to its power.

Lately, he agreed that CHP MPs will sit on Erdogan’s parliamentary commission, billed as set up to solve Turkey's "Kurdish question".

The commission is supposed to amend the constitution and pass some laws. There's no need to mention that all the legislation it puts through will serve the purposes of the Erdogan regime.

Erdogan has not jailed any more CHP mayors since Ozel agreed to place some of his lawmakers on the commission.

The tragedy of CHP’s voters

Ozel’s voters were against participating in the commission as de factor there will be no opposition in the country when the CHP establishes such a vital decision-making parliamentary coalition with the ruling parties.

The CHP’s voters are the biggest tragedy on the Turkish political stage. The voters of the ruling parties are interested in cash. The Kurds are looking for a nation state. The CHP’s voters insist on not fathoming that when a country’s political scene is reconfigured for perpetual power, as happened in Turkey in 2002, the plans must include hobbling the opposition. Keeping it compliant and operating within tolerable limits does the trick.

You cannot perform such a big job and take the risk of leaving the opposition parties to be whatever they would like to be.

Across two decades, the CHP’s voters have voted for many interesting characters representing their party, ranging from Deniz Baykal to Ekmeleddin Ihsanoglu, Kemal Kilicdaroglu, Muharrem Ince and Mustafa Sarigul, among others. Their new man is Ozel, the former keeper of a pharmacy.

Ozel is in his 50s and has yet to solve his hyperactivity problem. He is always in a rush, but he's just fidgeting. He is supposed to rescue Turkey.

If politics is simply about perceptions, then Ozel's career ended when he was slapped in the face before cameras. It was a move aimed at clearing the minds of those who had some idea that Ozel could be perceived as a political leader on the way to the top.

Erdogan rules

On the commission, Erdogan’s Justice and Development Party (AKP) will have an absolute majority. Additionally, it will be backed by allies such as the Nationalist Movement Party (MHP). Erdogan will prevail.

Ankara, we have a problem!

However, the commission creates a problem in the Turkish political theatre as the CHP is now openly serving as a partner to the ruling regime.

For the sake of solving this problem, Ozel has lately switched to a louder, harsher tone against the AKP, launching polemics.

Opposition product on offer, the Iyi Party

The small opposition Iyi Party, meanwhile, is not participating in the commission. It can now play the role of the opponent to the regime for the consumer who is looking to buy an opposition product.