Turkey hikes inflation forecast to 28.4% as war pushes outlook higher
Turkey lifts its inflation outlook as the Middle East conflict weighs on the country's economic projections.
Turkey raises inflation outlook amid regional turmoil
Vice President Cevdet Yilmaz announced on Sunday that Turkey’s projected year‑end inflation has been lifted to 28.4 percent as the government presented its medium‑term economic programme covering 2027‑2029. The upward revision reflects the pressure from the ongoing Middle East conflict on the country’s price dynamics.
Yilmaz told a televised audience that inflation is expected to resume its decline in the fourth quarter of 2026 and settle at 28.4 percent by the close of the year. He noted that the previous medium‑term plan for 2026‑2028 had set the year‑end rate at 16 percent. The new roadmap projects inflation falling to 21 percent in 2027, 13.5 percent in 2028 and 9 percent in 2029.
Inflation Forecast Revised
Official statistics show the annual inflation rate eased to 31.51 percent in August, down from 31.75 percent in July. Since December 2021, the rate has lingered above the 30‑percent mark and reached a peak of more than 75 percent in May 2024 before beginning to moderate.
War Impact on Prices
Yilmaz emphasized that the Middle East war has been a decisive factor in the higher inflation estimate. He cited the central bank’s calculation that the conflict adds roughly seven percentage points to price growth, stating, “According to our central bank, the direct and indirect effects of the war on inflation have been estimated at approximately seven percentage points.”
Economic Programme
The administration highlighted that curbing inflation remains the top priority of its economic agenda. Yilmaz claimed the government has achieved “significant progress in combating inflation” and pointed to a clear downward trend after inflation surged to 75.5 percent in May 2024. He reinforced the point with the remark, “Inflation, which had risen to 75.5% in May 2024, has begun to show a clear downward trend as a result of the policies we have implemented.”
Government Outlook
The medium‑term plan relies on tighter monetary policy, fiscal discipline and structural reforms aimed at stabilizing the lira and restoring confidence. By 2027 the programme expects inflation to drop to 21 percent, with further reductions to 13.5 percent in 2028 and 9 percent in 2029.
Analyst View
Observers note that the trajectory will hinge on how regional tensions evolve and on the central bank’s capacity to keep inflation expectations anchored. While the latest forecast is more optimistic than the 16‑percent target set a year earlier, the lingering effects of the war keep the outlook vulnerable to any resurgence of supply‑chain disruptions or geopolitical shocks.
Source: euronews.com · 2026-09-07