Türkiye’s disinflation process remains on track despite recent price data, Treasury and Finance Minister Mehmet Şimşek said on Friday, stressing that temporary factors such as drought and frost have pushed food prices higher but do not alter the broader trend.

“Inflation has fallen to 33% this year; that’s progress,” Şimşek told an event in Istanbul. He said it appears difficult to hit the 25%-29% forecast range for inflation at the end of this year, but suggested that conditions for disinflation continue.

Türkiye’s annual inflation rate jumped above expectations to 33.29% in September, which prompted the central bank to slow its monetary easing cycle to address stubborn price pressures.

The first rise in the annual rate since a peak of 75.4% in May last year was driven by sharp increases in food, housing and education prices. Monthly inflation in September stood at 3.23%, also above forecasts.

Şimşek cited this year’s developments, like drought and frost, which he said they could not have foreseen when they designed the government’s medium-term program.

Despite these, the minister noted, disinflation continues. He stressed that inflation data in the last couple of months does not change perceptions, and the temporary deterioration in expectations will be at a different place next year.

“Food inflation reflects agricultural frost and drought; if drought does not persist next year, it will create a base effect,” Şimşek said.

Last week, the Central Bank of the Republic of Türkiye (CBRT) slowed its easing cycle with a 100-basis-point rate cut bringing the policy rate to 39.5%, citing a slowdown in disinflation and vowing to maintain tight monetary policy stance.

The bank said risks posed by recent price developments, particularly in food, to the disinflation have become more pronounced and inflation expectations have picked up in October, according to the minutes of its policy-setting meeting released on Friday.

It said leading indicators suggest that the unfavorable trend in food prices continues, albeit at a slower pace.

Official data due on Monday is likely to show that price pressures remained elevated in October, according to surveys.

Economists said price hikes for clothing and unprocessed food due to a seasonal impact, as well as increases in automotive, energy and services inflation would impact October inflation.

Strong 2026 decline predicted

Surveys now see inflation dropping to around 32% by the end of the year. The Turkish central bank has a target of 24% with a forecast range of 25%-29%.

According to Şimşek, disinflation will continue strongly in 2026 and financing conditions will improve as inflation continues to decline in the coming months.

Both the government’s medium-term program and the central bank forecast inflation would cool toward 16% by the end of next year.

The CBRT said on Friday it would unveil its last inflation report of the year next week.

Şimşek went on to say say that the budget deficit would continue to fall and support disinflation and that the country will record a primary surplus in 2026.

He underlined that decline in the current account deficit needs to be made permanent, and that requires structural reforms.

Türkiye has reached adequate reserve coverage on a broad definition and is phasing out the foreign exchange-protected Turkish lira deposit scheme, or KKM, Şimşek said.

“We are ending the KKM. There is around $5 billion left in outstanding accounts, and that will conclude by late November or early December,” he said.

He described the slowdown in economic growth as moderate and consistent with the macroeconomic adjustment process.

“There is a slowdown in growth, but considering the overall conjuncture, growth remains at a reasonable and moderate level,” Şimşek said.

Şimşek added that the government may set certain fixed tax adjustments below the official inflation target next year to help guide inflation expectations lower.

“We may determine the increases in specific taxes below the inflation target,” he said.


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