Hayri Kozanoğlu
According to TÜİK, consumer prices rose by 2.55% in October. The increase rate reached 28.63% compared to the end of December 2025. Thus, not only is it impossible to close 2025 within the predicted range of 25-29 per cent, but the government has also lost any chance of closing the year with propaganda claiming ‘we are below 30 per cent’. Consumer inflation for the last year also stood at 32.87 per cent. The twelve-month average inflation rate, which is the main concern for citizens, reached 37.15 per cent.
THE CENTRAL BANK THREW IN THE TOWEL
However, these figures are far from the results announced by the İstanbul Chamber of Commerce (İTO), which were updated to be in line with TÜİK’s findings. According to the İTO, consumer prices rose by 3.31 per cent monthly in October 2025, while annual inflation reached 40.84 per cent. This discrepancy once again called into question the credibility of the inflation rates announced by the TÜİK.
On the other hand, even these results have further weakened the already low credibility of the disinflation programme implemented by Mehmet Şimşek and the CBRT’s economic management. Şimşek adopted a defensive stance, stating, ‘A 33 per cent reduction in inflation is progress, but the 25-29 per cent range is challenging.’ The CBRT also essentially threw in the towel in its Monetary Policy Committee Meeting Summary, stating, ‘The data shows that the disinflation process has slowed down. According to leading indicators, the negative trend in food prices continues, albeit at a slower pace.’ The fact that the interest rate decision for October, which is the subject of this text, was to cut rates by 100 basis points while inflation was rising also presented an inconsistent picture to the markets.
INTEREST RATES ARE BEING CUT WHILE INFLATION IS RISING
A policy interest rate of 39.50 per cent is still very high. Furthermore, the expectation that inflation can be reduced simply by keeping interest rates high is invalid. However, considering that the CBRT is an institution that pays little attention to the problems and difficulties of citizens and only expects appreciation from the markets, its resort to interest rate cuts while things are not going well on the inflation front was perceived as both an inconsistency and confirmation that it cannot act outside the instructions of the Palace. Taking over inflation at 38.21 per cent in June 2023 and only managing to bring it down to 32.87 per cent after imposing such a heavy burden on the public should be considered a complete failure. In fact, Şimşek’s consolation that ‘the programme has not derailed despite internal and external shocks’ proves that they are in a deadlock.
PRODUCER PRICES HAVE RISEN
Meanwhile, domestic producer prices rose by 1.63 per cent in October, pushing annual inflation up to 27 per cent. As the increase rate in October 2024 was 1.29 per cent, this data pushed up annual producer inflation. Although the increase in producer prices is below consumer prices, it is thought that it will affect consumer inflation with a delay, so things are not going well on this front either. With producer prices on this trajectory, the target of consumer inflation reaching 13-19 per cent in 2026 is not achievable. The gap between consumer and producer prices, which stood at around 15 points at the beginning of the year and was seen as a sign that inflation would start to decline, has thus narrowed to 5.9 points.
NECESSARY EXPENSES ONLY
In October, prices rose by 2.94 per cent for goods and 1.79 per cent for services. Thus, goods inflation stood at 27.65 per cent and services inflation at 44.44 per cent. The expenditures of low-income citizens are concentrated in three main categories: food, rent and transport. Annual price increases are above headline inflation, at 66.28 per cent for rent, 34.64 per cent for food and 41.33 per cent for transport. This indicates that, in a sense, inflation for workers is higher than the average. The 40.56 per cent price increase for bread and cereals reinforces this observation for the poor. As for the inflation rate in clothing and footwear, which is 7.27 per cent below the average, and durable goods, which is 23.20 per cent below the average, this seems to be a natural result of the low exchange rate and the fact that the demand of the general public is limited to essential items, with discretionary spending shrinking considerably. This development only seems to benefit the upper income group.
BEWARE OF THE TRAP!
The inflation data announced by TÜİK also revealed the Revaluation Rate. Calculated based on the 12-month average of the Producer Price Index (PPI), the revaluation is expected to be applied at a rate of 25.49%. Normally, the revaluation rate determines driving licences, passports, motor vehicle tax (MTV), taxes, fees and penalties. However, Mehmet Şimşek made a statement on this matter, announcing that they are considering updating taxes and fees at a lower rate than the revaluation rate, taking inflation targets into account. At first glance, this seems like good news. Vehicle owners will pay lower motor vehicle taxes, exit fees for travelling abroad will be set at a lower rate, etc. However, our experience suggests that this move will be accompanied by a ‘we have done our part, now you must make sacrifices’ type of rhetoric, based on inflation targets that are again very unlikely to be achieved, when determining the minimum wage, pensions and public sector salaries.
In an environment where the inflation expectation for 12 months ahead is 54.39 per cent for households and 36.30 per cent for the real sector in the CBRT’s own survey, it is clear that no one is convinced by the inflation targets. However, when determining wages for 2026, it is crucial that rights holders voice their demands in a much more determined and combative manner to ensure that people’s fate is not left to the mercy of those in power. It is also vital that the social opposition places this effort at the centre of its agenda, as this would be both a fair course of action and would contribute to its mass appeal by giving voice to the daily struggles of ordinary citizens.
Note: This article is translated from the original article titled Enflasyon hem yüksek hem de inandırıcı değil, published in BirGün newspaper on November 4, 2025.
