Turkey’s Inflation Rate YoY for January 2026: Disinflation Continues, but Risks Persist
Turkey’s annual inflation rate for January 2026 registered at 30.65%, according to the latest release from the Sigmanomics database. This marks a slight decrease from December 2025’s 30.89% and extends the disinflation trend that began in April 2025. While headline inflation is now at its lowest level since March 2023, it remains well above the central bank’s medium-term target, underscoring persistent macroeconomic challenges.
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Big-Picture Snapshot
Turkey’s inflation rate for January 2026 (reported February 3, 2026) came in at 30.65% year-on-year, slightly below the consensus estimate of 30.00% and down from December’s 30.89% reading. This marks the ninth consecutive monthly decline, with the rate falling from 38.10% in April 2025 and 37.86% in May 2025. The 12-month average now stands at 33.63%, highlighting the gradual but persistent disinflation since mid-2025.
Drivers this month
- Food and non-alcoholic beverages: +0.12 percentage points (pp) contribution, reflecting seasonal moderation.
- Transport: -0.08 pp, as fuel prices stabilized.
- Housing and utilities: +0.04 pp, with rent increases slowing but still elevated.
Policy pulse
The Central Bank of the Republic of Turkey (CBRT) maintains a policy rate of 45%, far above inflation, signaling a restrictive stance. However, with inflation still triple the 5% target, real rates remain only modestly positive, limiting policy flexibility.
Market lens
Immediate reaction: USDTRY rose 0.3% in the first hour post-release, reflecting lingering concerns over price stability. Turkish 2-year government bond yields edged up by 7 basis points, while 5-year breakeven inflation rates held near 28.5%.
Foundational Indicators
January’s 30.65% inflation print extends the downward trend from recent months: December 2025 (30.89%), November (31.07%), and October (32.87%). Compared to the year-ago period (January 2025: 55.2%[1]), inflation has more than halved, but remains among the highest in emerging markets.
Drivers this month
- Core inflation (excluding food and energy) eased to 28.9%, suggesting broad-based disinflation.
- Producer prices rose 1.1% month-on-month, indicating upstream cost pressures are moderating but not yet benign.
- TRY depreciation since December limited further disinflation, especially in imported goods.
Policy pulse
CBRT’s tight monetary stance is reinforced by fiscal restraint: the government’s primary budget surplus reached 0.8% of GDP in Q4 2025. However, election-year spending and earthquake reconstruction outlays could test fiscal discipline in 2026.
Market lens
TRY-denominated assets saw muted gains, with BIST 100 up 0.4% intraday. Foreign investor flows remain cautious, awaiting clearer evidence of sustained disinflation and credible policy commitment.
Chart Dynamics
Drivers this month
- Food inflation slowed to 32.1% YoY, down from 33.4% in December.
- Energy prices stabilized, but rent and services inflation remain sticky.
- Imported goods inflation ticked up as TRY weakened 1.2% MoM.
Policy pulse
CBRT is expected to hold rates steady at 45% at its next meeting, with forward guidance emphasizing vigilance against second-round effects. Real policy rates are positive, but only marginally so given high inflation expectations.
Market lens
Immediate reaction: USDTRY rose 0.3% and 2-year yields climbed 7 bps, signaling market skepticism about rapid further disinflation. The BIST 100 index was flat, while credit default swap (CDS) spreads widened by 5 bps.
Forward Outlook
Looking ahead, the inflation trajectory will hinge on monetary policy credibility, fiscal discipline, and external shocks. The CBRT’s restrictive stance is likely to persist through mid-2026, but election-year spending and global commodity volatility pose upside risks.
Scenarios
- Bullish (20% probability): Inflation falls below 25% by July 2026, driven by further TRY stabilization and fiscal restraint.
- Base case (60% probability): Inflation declines gradually to 27–28% by mid-2026, as disinflation slows and core pressures persist.
- Bearish (20% probability): Inflation rebounds above 32% if TRY depreciates sharply or fiscal slippage occurs.
Risks
- Geopolitical tensions in the region could disrupt energy imports and fuel price spikes.
- Global risk-off sentiment may pressure TRY and raise imported inflation.
- Domestic wage hikes and social transfers could reignite demand-side pressures.
Market lens
TRY volatility is likely to persist, with FX and rates markets pricing in a slow disinflation path. Investors will watch for signals of policy continuity and credible fiscal plans post-election.
Closing Thoughts
Turkey’s January 2026 inflation print confirms a sustained, if slowing, disinflation trend. While headline rates are moving in the right direction, the path to single-digit inflation remains long and fraught with risks. Policy credibility, fiscal discipline, and external stability will be critical to anchoring expectations and restoring investor confidence. The coming months will test the resilience of Turkey’s macro framework as the country navigates both domestic and global headwinds.
Key Markets Likely to React to Inflation Rate YoY
Turkey’s inflation data has direct and indirect impacts on a range of tradable assets. The Turkish lira (USDTRY) is highly sensitive to inflation surprises, as are Turkish equities (BIST 100) and government bonds (TRY2Y). Global risk sentiment and commodity prices (e.g., Brent) also respond to Turkish inflation, given the country’s role as an emerging market bellwether. Crypto assets like BTCUSD can serve as hedges during periods of lira volatility.
- BIST100 – Turkish equities, inversely correlated with inflation surprises and policy tightening.
- USDTRY – Turkish lira exchange rate, highly sensitive to inflation and CBRT policy signals.
- EURTRY – Euro/lira pair, tracks external funding and inflation expectations.
- BTCUSD – Bitcoin, often used as a hedge against lira depreciation and inflation spikes.
- ISCTR – Türkiye İş Bankası stock, a bellwether for domestic financial conditions and inflation pass-through.
| Year | Inflation Rate YoY (%) | USDTRY (avg) |
|---|---|---|
| 2020 | 14.6 | 7.0 |
| 2021 | 36.1 | 8.9 |
| 2022 | 64.3 | 14.7 |
| 2023 | 48.5 | 21.5 |
| 2024 | 55.2 | 28.3 |
| 2025 | 38.1 (Apr) | 32.7 |
| 2026 | 30.65 (Jan) | 34.1 |
Since 2020, USDTRY has closely tracked the inflation rate, with sharp lira depreciation accompanying inflation spikes. The recent moderation in inflation has slowed lira losses, but the currency remains vulnerable to renewed price pressures or policy slippage.
FAQ
Q1: What is Turkey’s latest YoY inflation rate and how does it compare to previous months?
A1: For January 2026, Turkey’s YoY inflation rate was 30.65%, down from December’s 30.89% and well below the 12-month average of 33.63%.
Q2: What are the main risks to Turkey’s disinflation trend?
A2: Key risks include TRY depreciation, fiscal slippage, wage hikes, and external shocks such as energy price spikes or geopolitical tensions.
Q3: How do Turkish financial markets typically react to inflation surprises?
A3: The lira (USDTRY, EURTRY) and Turkish equities (BIST100, ISCTR) are highly sensitive, with negative surprises often triggering currency weakness and higher bond yields.
Bottom line: Turkey’s inflation is falling, but the path to price stability remains challenging. Vigilant policy and external stability are essential for further progress.
- Sources: Sigmanomics database, CBRT, Turkish Statistical Institute, Bloomberg, Reuters.
Updated 2/3/26
January’s 30.65% inflation rate is marginally lower than December’s 30.89% and well below the 12-month average of 33.63%. The pace of decline has slowed: the monthly drop was just 0.24 percentage points, compared to a 1.8 pp drop from October to December. Since April 2025’s peak of 38.10%, inflation has fallen by 7.45 pp, but the curve is flattening, suggesting stickier underlying pressures.
Historical context: Inflation was 33.52% in August 2025, 35.41% in June, and 37.86% in May, showing a steady but decelerating disinflation path. The year-on-year drop from January 2025’s estimated 55.2% is stark, but the last three months suggest the “easy wins” from base effects and energy price normalization may be fading.