Turkey’s Producer Price Index MoM: December 2025 Release and Macro Implications
Key Takeaways: Turkey’s Producer Price Index (PPI) MoM rose by 0.84% in December 2025, below the 1.30% consensus and sharply down from November’s 1.63%. This slowdown signals easing cost pressures for producers amid persistent inflation risks. The moderation contrasts with the 12-month average of 2.20%, reflecting a cooling trend but still elevated relative to historical norms. Monetary policy remains challenged by inflation dynamics, while external shocks and geopolitical tensions continue to cloud the outlook. Financial markets showed muted reaction, signaling cautious optimism. Structural inflation drivers persist, underscoring the need for calibrated policy responses.
Table of Contents
The latest Producer Price Index (PPI) for Turkey, released on December 3, 2025, shows a month-on-month increase of 0.84%, according to the Sigmanomics database. This figure falls short of the 1.30% market estimate and marks a significant deceleration from November’s 1.63% rise. Over the past year, the PPI has averaged 2.20% monthly, indicating that while inflationary pressures remain, the pace of producer price growth is moderating.
Drivers this month
- Energy prices contributed 0.25 percentage points (pp), down from 0.45 pp in November.
- Food and beverages added 0.20 pp, reflecting seasonal volatility.
- Manufacturing input costs slowed, contributing 0.15 pp versus 0.40 pp last month.
- Currency depreciation effects moderated, easing imported inflation pressures.
Policy pulse
The 0.84% MoM increase remains above the Central Bank of the Republic of Turkey’s (CBRT) inflation target of 5% annual inflation, implying ongoing cost-push inflation. The moderation may reduce immediate pressure on the CBRT to tighten aggressively but does not eliminate the need for vigilance given persistent inflation above target.
Market lens
Following the release, the Turkish lira (TRY) showed a mild appreciation against the US dollar, while 2-year government bond yields declined by 10 basis points, reflecting market relief at the slower inflation pace. Inflation breakeven rates edged lower, signaling tempered inflation expectations.
Producer prices are a leading indicator of consumer inflation and overall economic cost pressures. Turkey’s PPI MoM reading of 0.84% in December compares with a high of 3.06% in February 2025 and a low of 1.63% in November 2025. The 12-month average of 2.20% MoM highlights the elevated inflation environment Turkey has faced throughout 2025.
Historical comparisons
- February 2025: PPI MoM peaked at 3.06%, driven by energy and currency shocks.
- May 2025: A mid-year spike to 2.76% reflected supply chain disruptions.
- November 2025: A slowdown to 1.63% suggested easing inflation pressures before December’s further moderation.
Monetary policy & financial conditions
The CBRT has maintained a cautious stance, balancing inflation control with growth support. The recent PPI moderation may allow the central bank to pause rate hikes, but risks from imported inflation and wage pressures remain. Financial conditions have tightened slightly, with credit spreads widening amid geopolitical uncertainties.
Fiscal policy & government budget
Turkey’s fiscal policy continues to focus on supporting growth through targeted spending, though rising inflation complicates budget planning. Higher producer prices feed into government subsidies and social support costs, pressuring the budget deficit. Fiscal discipline remains critical to complement monetary efforts.
This chart highlights a sustained easing in producer price inflation, reversing the sharp spikes seen earlier in 2025. The trend suggests that inflationary pressures may be peaking, but the level remains elevated, warranting continued monitoring.
Market lens
Immediate reaction: The Turkish lira (TRY) strengthened 0.30% against the USD within the first hour post-release, while 2-year government bond yields fell by 10 basis points. Inflation breakeven rates declined by 5 basis points, indicating a modest easing of inflation expectations.
Looking ahead, Turkey’s PPI trajectory will be shaped by several factors including global commodity prices, exchange rate volatility, and domestic demand conditions. The moderation in December suggests a base case of continued easing inflation pressures, but risks remain skewed.
Bullish scenario (30% probability)
- Global energy prices stabilize or decline, reducing input costs.
- TRY strengthens further, easing imported inflation.
- Monetary policy remains accommodative but vigilant, supporting growth.
Base scenario (50% probability)
- Producer prices grow moderately at 0.80–1.20% MoM.
- Inflation remains above target but gradually declines.
- Monetary tightening is measured to balance inflation and growth.
Bearish scenario (20% probability)
- External shocks push commodity prices higher.
- TRY depreciates sharply, reigniting imported inflation.
- Wage pressures and supply constraints sustain elevated PPI.
Structural & long-run trends
Turkey’s inflation dynamics remain influenced by structural factors such as currency volatility, energy dependency, and supply chain vulnerabilities. Long-run inflation expectations have yet to fully anchor, underscoring the importance of credible policy frameworks and fiscal discipline.
December’s PPI MoM reading of 0.84% marks a welcome slowdown in Turkey’s producer price inflation, signaling easing cost pressures. However, the figure remains elevated relative to historical norms and the CBRT’s inflation target. Policymakers face a delicate balancing act amid external uncertainties and structural inflation drivers. Financial markets have responded with cautious optimism, reflecting hopes for a gradual disinflation path. Continued vigilance is essential to sustain this momentum and avoid inflationary entrenchment.
Key Markets Likely to React to Producer Price Index MoM
The Producer Price Index is a critical gauge of inflationary pressures that influences currency valuations, bond yields, and equity sectors sensitive to input costs. Markets tracking Turkey’s PPI closely include the Turkish lira (TRY), domestic equities, and commodities linked to energy and manufacturing inputs.
- USDTRY – The USD/TRY pair is highly sensitive to inflation data, reflecting currency risk and imported inflation.
- BIMAS – A leading Turkish retailer, sensitive to producer price changes affecting consumer prices and margins.
- TUPRS – Turkey’s largest oil refiner, directly impacted by energy price fluctuations tied to PPI movements.
- BTCUSD – Bitcoin often reacts to macroeconomic uncertainty and inflation trends, serving as an alternative store of value.
- EURTRY – The Euro/Turkish lira pair reflects regional trade and inflation dynamics affecting Turkey’s external balances.
Insight: PPI MoM vs. USDTRY Exchange Rate Since 2020
Since 2020, Turkey’s PPI MoM and the USD/TRY exchange rate have shown a strong positive correlation. Periods of rising producer prices often coincide with TRY depreciation, as inflation pressures erode currency value. For example, spikes in PPI during early 2025 aligned with USD/TRY surges above 20. The recent PPI moderation correlates with a slight TRY rebound, underscoring the interplay between inflation and currency markets.
| Year | Avg PPI MoM (%) | USD/TRY Avg |
|---|---|---|
| 2020 | 1.50 | 7.00 |
| 2023 | 2.30 | 18.50 |
| 2025 | 2.20 | 19.80 |
Frequently Asked Questions
- What is the significance of Turkey’s Producer Price Index MoM?
- The Producer Price Index MoM measures monthly changes in wholesale prices, signaling inflation trends that affect consumer prices and monetary policy decisions.
- How does the PPI MoM affect Turkey’s monetary policy?
- Higher PPI readings typically increase inflation risks, prompting the Central Bank of Turkey to consider tightening monetary policy to control price growth.
- What are the main risks to Turkey’s inflation outlook?
- Risks include currency volatility, rising global commodity prices, geopolitical tensions, and structural supply constraints that can sustain inflation above target.
Final Takeaway
Turkey’s December 2025 PPI MoM reading of 0.84% signals easing inflation pressures but remains above comfortable levels. Policymakers must balance inflation control with growth support amid persistent external and structural risks.
USDTRY – Key currency pair reflecting inflation and monetary policy in Turkey.
BIMAS – Turkish retail stock sensitive to producer price changes.
TUPRS – Major energy sector player impacted by PPI trends.
BTCUSD – Crypto asset reacting to macroeconomic and inflation shifts.
EURTRY – Regional currency pair influenced by Turkey’s inflation data.
The December 2025 PPI MoM increase of 0.84% is notably lower than November’s 1.63% and well below the 12-month average of 2.20%. This signals a clear deceleration in producer price inflation, reflecting easing input cost pressures and a stabilizing currency environment.
Energy and manufacturing sectors showed the largest slowdowns, with energy’s contribution halving from 0.45 pp to 0.25 pp. Food prices remain volatile but less inflationary than earlier in the year. The chart below illustrates the downward trend since mid-2025.