Turkey’s consumer price index (CPI) inflation officially stood at 32.95% y/y in August versus 33.52% y/y in July and 44% y/y at end-2024, the Turkish Statistical Institute (TUIK, or TurkStat) said on September 3.

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 33%, Turkey remains in eighth place in the world inflation league.

The Istanbul-based ENAG inflation research group of economists, meanwhile, calculated an inflation figure of 65.49% for August, following its assessment of 65.15% for July.

Path to the 1%s

TUIK also posted a monthly official inflation figure of 2.04% for August after releasing 2.06% for July, 1.37% for June, 1.53% for May and 3.00% for April.

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

Sub-30% goal for end-2025

TUIK is set to release end-2025 official inflation at around 30%. The goal is to provide a figure that stands below the 30%-level. Getting there will depend on developments in the last quarter of the year.

On August 14, Turkey’s central bank raised its end-2025 official inflation "forecast" range to 25-29% in its latest quarterly inflation report.

The central bank anticipated that the seasonally-adjusted monthly inflation figures will fall below the 1.5%-level starting from 3Q25 and end the year at a little bit above the 1%-level.

For July, 2.65% was released. The August reading will be released on September 4. It is supposed to come in at above the 1.5%-level. A sharp decline may be on the way in the September release.

Tweet: Mahfi Egilmez (@mahfiegilmez), a former head of Turkey’s Treasury, wrote on X that the country's inflation targets and forecasts are actually orders delivered to TUIK.

On November 7, the central bank will release its next and last quarterly inflation report for this year, which will include updated forecasts.

Three rate cuts ahead

On July 24, the central bank revived its monetary easing cycle by delivering a 300-bp rate cut that brought its policy rate to 43%.

On September 11, the authority will hold its next rate-setting meeting. As things stand, another rate cut is almost certain. The size of the cut is, meanwhile, not certain.

October 23 and December 11 are the other remaining dates for the setting of rates 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, the realisation will come in somewhere between 34% and 37% depending on the course of the official inflation releases.

Turkey on edge once again

In recent months, bne Intellinews has been reminding: “A trial concerning the November 2023 national [main opposition Republican People’s party] CHP party congress is 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.”

This publication has also been noting that 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, followed by a disclaimer: “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.”

September 15: Ozel to wave bye-bye?

Istanbul Blog writes: On September 2, “no seizure” expectations were hit by a decision of the Istanbul 45th (Asliye Hukuk) civil court of first instance, which annulled the CHP’s last provincial congress gathering in Istanbul.

The management representatives elected at the congress were dismissed and a board of trustees led by Gursel Tekin was appointed.

According to Turkish legislation, delegates attending the provincial congresses of political parties elect delegates who then vote in polls to elect party chairs.

The congress in question voted for pro-Ozgur Ozel delegates. Ozel, the current national chair of the CHP, won his party’s leadership contest in November 2023.

Istanbul is Turkey’s largest city. CHP Istanbul elected 196 of the 1,368 delegates who were eligible to vote in the national party congress.

These 196 were also dismissed by the court decision. Given that they voted in the party leadership poll, Ozel’s right to his post is now subject to heightened risk.

Tensions ahead

Since the court released its decision, the CHP management has been reiterating that they will not surrender the party’s Istanbul headquarters.

Tekin, meanwhile, said that the board of trustees has already taken up its role and that they do not need the headquarters building in order to conduct their duties.

No preparations for a police raid to take over the HQ are visible at this stage.

Note that the CHP is at this moment a de facto divided party. Tekin is in charge of the money.

“How will they pay salaries?”

On June 24, a CHP delegation visited Ozel’s predecessor Kemal Kilicdaroglu, who has repeatedly informed journalists that he stands ready to replace Ozel should the court dismiss him.

Kilicdaroglu repeated his stance to the delegation. When the delegation asked him, “What will be the reaction of the CHP cadres?”, he reportedly replied: “Friends, there's nothing to worry about. What will the organisation's reaction be? They'll react in two or three days. So, what? They won't let me into the headquarters. Yes, they shouldn't. The headquarters is where the party leader is. All of this will be fine. There's no need to worry… How will they pay salaries? How will they elect their members of parliament? If they oppose this decision, how will they elect the mayor?”

CHP, between the money and the voters

On June 11, prior to the former CHP party leader’s assessments on the party management, bne IntelliNews posed a rhetorical question: “Why does the CHP serve as the opponent’s chimpanzee in this circus?”

And, this publication noted: “Rejecting the role of whipping boy in this theatre would mean rejecting billions of dollars. The CHP cadres would rebel and overthrow the party management if such a move was on the cards.”

On August 14, this publication reiterated: “Nevertheless, the feckless CHP will almost certainly play within the limits of the field set by the regime until the last municipality is seized and the last salary of the last CHP member in the last CHP-held public post is cut.”

The current tune sung by the CHP management suggests that they will not hand over the Istanbul HQ to the trustees. So, they have no problem…

Messages to Imamoglu and Ozel

As regards the current political crisis in the country, it should also be noted that interesting occurrences are once again on the rise.

Some politicians have been attacked. And information has been circulated suggesting that some suspicious characters were arrested in front of the home of Akin Gurlek, the Istanbul chief public prosecutor who has been conducting the judicial operations against the CHP.

All such incidents are messages to jailed Istanbul mayor and CHP presidential candidate Ekrem Imamoglu, seen as a politician who would very seriously threaten the “traditional” 51% election wins announced by Erdogan in the next presidential contest, and Ozel, who was elected with Imamoglu’s support.

Imamoglu and Ozel, who is playing a supportive role in Imamoglu’s push to become president, always have the option to step back. If they do not, violence that would push the country into another state of emergency remains an option to the regime.

Offloading shares, weakness in bonds

On August 25, Erdogan said: “The recovery on our stock exchange has gained strength in recent weeks.”

Given that it is impossible to think that a politician in Turkey was aware in advance of an upcoming ruling by an independent court a week ahead of its announcement, it is not possible to assess that Erdogan’s words invited some buyers to offload shares prior to the upcoming nosedive on Borsa Istanbul.

On August 21, bne IntelliNews noted: “Some positive movement on Borsa Istanbul, but tread with care.”

In addition to Borsa Istanbul, Turkey’s eurobonds and domestic lira bonds are also under stress.

The USD/TRY remains under control.