Turkey’s inflation rate MoM for December 2025 came in at 0.87%, a notable slowdown from November’s 2.55% and significantly below the 1.25% market estimate, according to the Sigmanomics database. This deceleration continues a downward trend from the early-year peak of 5.03% in February. The latest figure signals easing price pressures amid ongoing monetary tightening and subdued domestic demand.

Drivers this month

• Shelter costs moderated, contributing 0.18 percentage points (pp) to inflation.
• Food and beverages inflation slowed, subtracting -0.12 pp.
• Energy prices remained stable, adding 0.05 pp.
• Used car prices declined marginally, reducing inflation by -0.05 pp.

Policy pulse

The 0.87% MoM inflation rate remains above the Central Bank of the Republic of Turkey’s (CBRT) 5% annual target but shows progress toward disinflation. The CBRT’s recent rate hikes and liquidity management appear effective in tempering demand-driven inflation components.

Market lens

Immediate reaction: The Turkish lira (TRY) appreciated modestly by 0.30% against the USD in the first hour post-release, while 2-year government bond yields declined by 12 basis points, reflecting improved inflation expectations. Breakeven inflation rates for 5-year bonds edged down 8 bps, signaling market confidence in the inflation trajectory.

Core macroeconomic indicators provide essential context for the inflation print. Turkey’s GDP growth slowed to an estimated 2.10% YoY in Q3 2025, down from 3.40% in Q2, reflecting weaker domestic consumption and export headwinds. Unemployment held steady at 11.20%, while wage growth moderated to 7.50% YoY, easing cost-push inflation pressures.

Monetary Policy & Financial Conditions

The CBRT maintained its policy rate at 22% in November, signaling a cautious stance amid inflation volatility. Credit growth decelerated to 8% YoY from 12% earlier in the year, reflecting tighter lending standards. The real policy rate remains positive, supporting disinflation efforts.

Fiscal Policy & Government Budget

Turkey’s fiscal deficit narrowed to 3.80% of GDP in Q3 2025, aided by improved tax collection and restrained public spending. The government’s commitment to fiscal discipline underpins macro stability, though elevated debt levels (around 40% of GDP) require ongoing vigilance.

External Shocks & Geopolitical Risks

Heightened geopolitical tensions in the Eastern Mediterranean and volatile commodity prices pose upside inflation risks. The TRY remains vulnerable to external shocks, especially given Turkey’s import dependence for energy and intermediate goods.

Price dynamics reveal that shelter and food categories, which together account for over 40% of the CPI basket, contributed less to inflation this month. Energy prices stabilized after sharp swings earlier in the year. The moderation in used car prices also helped contain headline inflation.

Market lens

Immediate reaction: TRY/USD strengthened by 0.30%, 2-year yields fell 12 bps, and 5-year breakeven inflation declined 8 bps, signaling market confidence in the inflation outlook.

Looking ahead, Turkey’s inflation trajectory depends on several factors. The baseline scenario (60% probability) assumes continued monetary discipline, stable commodity prices, and moderate wage growth, leading to a gradual decline in monthly inflation to around 0.50% by mid-2026.

Bullish scenario (20%)

• Stronger-than-expected fiscal consolidation and structural reforms.
• Improved geopolitical stability reducing risk premiums.
• Global commodity prices easing further, lowering import costs.
• Inflation falling below 0.40% MoM by Q3 2026.

Bearish scenario (20%)

• Renewed geopolitical tensions disrupting trade and energy supplies.
• Currency volatility triggering imported inflation spikes.
• Wage pressures intensifying amid labor market tightness.
• Inflation rising above 1.50% MoM, complicating CBRT’s policy stance.

Overall, Turkey’s inflation outlook is cautiously optimistic but remains vulnerable to external shocks and domestic policy execution risks.

Turkey’s December inflation MoM reading of 0.87% marks a meaningful step in the disinflation process, supported by tighter monetary policy and fiscal discipline. The slowdown from November’s 2.55% and the year’s earlier peaks reflects easing demand and price pressures. However, external risks and structural challenges persist, requiring continued vigilance from policymakers.

Financial markets have responded positively but remain cautious, reflecting the complex interplay of domestic reforms and global uncertainties. The CBRT’s ability to maintain real positive rates and the government’s fiscal prudence will be key to sustaining this momentum.

Long-run trends, including Turkey’s demographic dynamics and integration into global value chains, will shape inflation’s path beyond the near term. Structural reforms targeting productivity and competitiveness remain critical to anchoring inflation expectations sustainably.

Key Markets Likely to React to Inflation Rate MoM

Turkey’s inflation data historically influences several key markets. The Turkish lira (TRYUSD) often reacts sharply to inflation surprises due to its impact on monetary policy expectations. Local government bonds, especially the 2-year and 5-year maturities, track inflation closely as it affects real yields. Additionally, the BIST 100 index (XU100) shows sensitivity to inflation trends given its exposure to domestic consumption and export sectors. On the forex front, EURTRY responds to inflation-driven shifts in interest rate differentials. Finally, the cryptocurrency pair BTCUSD occasionally reflects risk sentiment shifts tied to inflation volatility.

• TRYUSD – Directly impacted by inflation and monetary policy shifts.
• XU100 – Turkey’s main equity index, sensitive to inflation-driven economic growth.
• ISCTR.IS – Leading Turkish bank, affected by interest rate and inflation dynamics.
• EURTRY – Reflects cross-currency inflation and interest rate differentials.
• BTCUSD – Proxy for risk sentiment influenced by inflation uncertainty.

FAQs

What is the latest inflation rate MoM for Turkey?

The December 2025 inflation rate MoM for Turkey is 0.87%, down from 2.55% in November.

How does this inflation reading compare historically?

It is the lowest monthly inflation since February 2025 and well below the 12-month average of 2.80%.

What are the macroeconomic implications of this inflation trend?

The easing inflation supports tighter monetary policy and fiscal discipline but remains vulnerable to external shocks and geopolitical risks.

Takeaway: Turkey’s inflation slowdown signals progress but demands continued policy vigilance amid external uncertainties.