The inflation rate for TL remained unchanged at 0.90% YoY in November 2025, continuing a modest upward trend from mid-year lows. This figure is below the 1.10% forecast, signaling subdued price pressures amid a complex macro backdrop. Over the past 12 months, inflation has oscillated between negative territory (-0.20% in February and March) and a peak of 0.90% in October and November, reflecting a slow but steady recovery from deflationary pressures earlier this year.

Drivers this month

• Energy prices stabilized, contributing 0.12 percentage points (pp) to inflation.
• Food and beverages added 0.25 pp, driven by supply chain normalization.
• Core services inflation remained muted at 0.10 pp.
• Used car prices and shelter costs showed negligible impact, each near zero.

Policy pulse

TL’s inflation remains well below the central bank’s 2.00% target, maintaining room for accommodative monetary policy. The central bank has kept the policy rate steady at 1.50%, signaling patience amid weak inflation and moderate growth. Inflation expectations remain anchored but slightly below target, limiting urgency for tightening.

Market lens

Immediate reaction: The TL currency weakened 0.30% against the USD in the first hour post-release, reflecting disappointment versus estimates. Short-term government bond yields edged down by 5 basis points, while breakeven inflation rates held steady near 1.00%.

Core macroeconomic indicators provide context for the inflation reading. GDP growth for TL is projected at 1.20% for 2025, a modest rebound from 0.70% in 2024. Unemployment remains elevated at 7.80%, restraining wage growth and consumer spending. The subdued inflation aligns with weak domestic demand and cautious business investment.

Monetary policy & financial conditions

The central bank’s policy rate has been unchanged for six months at 1.50%, reflecting a dovish stance. Credit growth remains sluggish at 2.10% YoY, while real interest rates hover near zero, supporting borrowing but limiting inflationary pressures. Liquidity conditions are stable, with no signs of financial stress.

Fiscal policy & government budget

Fiscal policy remains mildly expansionary, with a 2025 budget deficit forecast at 3.50% of GDP. Government spending on infrastructure and social programs supports demand but is calibrated to avoid overheating. Public debt stands at 55% of GDP, manageable but warranting cautious fiscal discipline.

External shocks & geopolitical risks

Global commodity prices have stabilized after mid-year volatility, easing imported inflation risks. Geopolitical tensions in the region remain moderate but could disrupt trade flows if escalated. TL’s trade balance improved slightly due to stronger exports, cushioning external vulnerabilities.

Drivers this month

• Energy prices stabilized, limiting upside volatility.
• Food inflation rebounded due to easing supply chain disruptions.
• Core inflation components remain subdued, indicating weak underlying demand.

Market lens

Immediate reaction: The TL currency depreciated 0.30% against USD, reflecting market disappointment versus the 1.10% estimate. Government bond yields fell slightly, signaling continued expectations of low inflation and steady policy rates.

Looking ahead, inflation in TL faces a mix of upside and downside risks. The baseline scenario projects inflation rising modestly to 1.20% by mid-2026 as demand recovers and supply constraints ease. The central bank is expected to maintain accommodative policy through this period.

Bullish scenario (20% probability)

Stronger-than-expected domestic demand and wage growth push inflation above 2.00%, forcing the central bank to tighten policy earlier than planned. Commodity prices rise, adding imported inflation pressures.

Base scenario (60% probability)

Inflation gradually rises to 1.20%–1.50% by mid-2026, consistent with moderate growth and stable commodity prices. Monetary policy remains accommodative, supporting recovery without triggering overheating.

Bearish scenario (20% probability)

Persistent weak demand and external shocks keep inflation below 1.00%, prolonging disinflationary pressures. The central bank may consider additional stimulus to support growth.

TL’s inflation rate of 0.90% YoY in November 2025 confirms a slow but steady recovery from earlier deflation. The subdued inflation environment supports continued accommodative monetary policy and cautious fiscal expansion. External risks and geopolitical uncertainties remain key watchpoints. Market sentiment reflects tempered expectations for inflation and interest rates in the near term.

Investors and policymakers should monitor wage trends, commodity prices, and geopolitical developments closely. The balance of risks suggests a gradual return to the central bank’s 2.00% inflation target over the next 12–18 months, barring major shocks.

Key Markets Likely to React to Inflation Rate YoY

Inflation data for TL influences a range of financial markets, from currency pairs to equities and cryptocurrencies. The following symbols historically track inflation trends closely, reflecting sensitivity to monetary policy shifts and economic growth prospects.

• USDTL – The USD/TL exchange rate reacts swiftly to inflation surprises, impacting import costs and export competitiveness.
• IBEX – Spanish equity index, correlated with TL’s inflation due to trade and regional economic linkages.
• BTCUSD – Bitcoin often serves as an inflation hedge, with price movements influenced by inflation expectations.
• TSLA – Tesla’s stock is sensitive to inflation-driven input costs and consumer demand shifts.
• EURUSD – Euro-dollar pair reflects broader monetary policy divergence influenced by inflation data.

Inflation Rate YoY vs. USDTL Exchange Rate Since 2020

Since 2020, TL inflation and the USD/TL exchange rate have shown a positive correlation. Periods of rising inflation typically coincide with TL depreciation against the USD, reflecting concerns over purchasing power and monetary policy responses. For example, the inflation dip to -0.20% in early 2025 aligned with a temporary TL strengthening, while the recent steady 0.90% inflation corresponds with a weakening USD/TL trend. This relationship underscores the importance of inflation data for currency market participants.

FAQs

What does the latest Inflation Rate YoY for TL indicate?

The latest inflation rate of 0.90% YoY indicates a stable but low inflation environment, reflecting subdued demand and moderate price pressures in TL’s economy.

How does this inflation reading affect monetary policy?

With inflation below the 2.00% target, the central bank is likely to maintain accommodative monetary policy, keeping interest rates steady to support growth.

What are the main risks to TL’s inflation outlook?

Key risks include geopolitical tensions, commodity price volatility, and potential shifts in domestic demand that could either accelerate or depress inflation.

Takeaway: TL’s inflation remains subdued but stable, supporting steady monetary policy and cautious optimism for gradual price normalization over the next year.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.