Turkey’s Producer Price Index YoY: December 2025 Release and Macroeconomic Implications
Table of Contents
The latest Producer Price Index (PPI) YoY for Turkey, released on December 3, 2025, registered a 27.23% increase. This figure is marginally higher than November’s 27.00% but below the consensus estimate of 28.00%, according to the Sigmanomics database. The PPI’s persistent elevation highlights ongoing inflationary pressures in Turkey’s wholesale sector, which feeds into consumer prices and overall inflation dynamics.
Drivers this month
- Energy prices contributed approximately 0.35 percentage points (pp) to the PPI rise, reflecting global commodity price volatility.
- Food and beverage sectors added 0.22 pp, driven by supply chain disruptions and seasonal demand.
- Manufacturing input costs rose by 0.18 pp, linked to imported raw material price increases amid TRY depreciation.
Policy pulse
The 27.23% PPI YoY remains well above the Central Bank of Turkey’s inflation target of 5%. This persistent gap constrains monetary policy options, as the bank balances inflation control with growth support. The slight miss versus estimates may reduce immediate pressure for aggressive rate hikes but keeps inflation expectations elevated.
Market lens
Immediate reaction: The Turkish lira (TRY) weakened by 0.30% against the USD in the first hour post-release, reflecting concerns over sustained inflation. Short-term yields on Turkish government bonds rose by 5 basis points, while breakeven inflation rates held steady near 9.50%. Equity markets showed limited movement, with the BIST 100 index down 0.20%.
Turkey’s PPI YoY has trended upward over the past eight months, rising from 23.50% in April 2025 to 27.23% in December. The 12-month average stands near 24.50%, indicating a sustained inflationary environment. This trend aligns with elevated consumer price inflation (CPI), which hovered around 35% YoY in recent months, underscoring cost-push inflation pressures.
Monetary Policy & Financial Conditions
The Central Bank of Turkey has maintained a cautious stance, keeping policy rates at 15% despite inflation well above target. The persistent PPI inflation complicates this approach, as wholesale price pressures risk feeding into headline inflation. Financial conditions remain tight, with elevated bond yields and a volatile TRY exchange rate reflecting risk premiums.
Fiscal Policy & Government Budget
Fiscal policy remains expansionary, with government spending aimed at supporting growth and social programs. However, elevated inflation and TRY depreciation increase debt servicing costs. The budget deficit widened to 3.80% of GDP in Q3 2025, raising concerns about fiscal sustainability amid inflationary pressures.
External Shocks & Geopolitical Risks
Global commodity price volatility, especially in energy markets, continues to impact Turkey’s PPI. Geopolitical tensions in the region add risk premiums to the TRY and disrupt supply chains. These external shocks exacerbate inflation risks and complicate policy responses.
This chart highlights a clear upward trend in Turkey’s PPI YoY, signaling persistent inflationary pressures. The steady rise over recent months points to ongoing cost increases in energy, food, and manufacturing inputs. This trend suggests inflation risks remain elevated, challenging monetary policy and financial stability.
Market lens
Immediate reaction: The TRY depreciated modestly by 0.30% against the USD, reflecting market concern over sustained inflation. Turkish government bond yields rose slightly, indicating increased inflation risk premiums. Equity markets showed muted response, with the BIST 100 index down 0.20%.
Looking ahead, Turkey’s PPI trajectory will be shaped by several factors. The ongoing global commodity price volatility, TRY exchange rate fluctuations, and domestic supply constraints will influence wholesale price inflation. Monetary policy is expected to remain cautious, balancing inflation control with growth support.
Bullish scenario (20% probability)
- Global energy prices stabilize or decline, easing cost pressures.
- TRY stabilizes or appreciates, reducing imported inflation.
- Monetary policy tightens moderately, anchoring inflation expectations.
- PPI growth slows to below 20% YoY by mid-2026.
Base scenario (60% probability)
- Commodity prices remain volatile but contained.
- TRY remains volatile but broadly stable.
- Monetary policy maintains current stance with gradual tightening.
- PPI remains elevated around 25-28% YoY through early 2026.
Bearish scenario (20% probability)
- Energy prices surge due to geopolitical shocks.
- TRY depreciates sharply, increasing imported inflation.
- Monetary policy constrained by growth concerns, delaying hikes.
- PPI accelerates above 30% YoY, fueling broader inflation.
Turkey’s December 2025 PPI YoY reading of 27.23% confirms persistent inflationary pressures in the wholesale sector. This elevated inflation environment poses challenges for monetary and fiscal policymakers amid external shocks and geopolitical risks. Financial markets remain cautious, pricing in sustained inflation risk. Structural factors such as energy dependence and currency volatility continue to underpin inflation dynamics. Policymakers must carefully navigate these headwinds to stabilize prices without derailing growth.
Key tradable instruments to watch include the BIST100 index, sensitive to inflation and monetary policy shifts; the USDTRY currency pair, reflecting exchange rate pressures; the EURTRY pair, tracking regional currency dynamics; the BTCUSD crypto pair, often a risk sentiment barometer; and the AKBNK.IS stock, a major Turkish bank sensitive to inflation and interest rates.
Key Markets Likely to React to Producer Price Index YoY
The Producer Price Index YoY is a critical inflation gauge influencing Turkey’s financial markets. Key markets that historically track PPI movements include the BIST100 equity index, which reacts to inflation and monetary policy shifts; USDTRY and EURTRY currency pairs, reflecting exchange rate volatility driven by inflation and external shocks; AKBNK.IS, a leading Turkish bank stock sensitive to interest rate changes; and BTCUSD, a crypto asset often influenced by risk sentiment shifts linked to inflation data. Monitoring these instruments provides insight into market sentiment and policy expectations.
Insight: PPI YoY vs. USDTRY Since 2020
Since 2020, Turkey’s PPI YoY and the USDTRY exchange rate have shown a strong positive correlation. Periods of rising PPI inflation coincide with TRY depreciation against the USD, reflecting imported inflation pressures and currency risk premiums. For example, spikes in PPI above 25% have typically preceded or coincided with USDTRY moves above 20. This relationship underscores the inflation-exchange rate feedback loop critical to Turkey’s macroeconomic stability.
FAQ
- What is the significance of Turkey’s Producer Price Index YoY?
- The PPI YoY measures wholesale price inflation, indicating cost pressures that often feed into consumer prices and influence monetary policy decisions.
- How does the PPI affect Turkey’s monetary policy?
- Elevated PPI inflation pressures the Central Bank of Turkey to consider tightening monetary policy to anchor inflation expectations, though growth concerns may limit aggressive hikes.
- What external factors influence Turkey’s PPI?
- Global commodity prices, especially energy, and geopolitical risks impact Turkey’s PPI by affecting import costs and supply chains, driving inflation volatility.
Takeaway: Turkey’s December 2025 PPI YoY reading of 27.23% signals entrenched inflation pressures, challenging policymakers amid external shocks and currency volatility.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The December 2025 PPI YoY reading of 27.23% compares to 27.00% in November and a 12-month average of approximately 24.50%. This reflects a steady upward trend in wholesale price inflation over the past eight months. The increase from October’s 26.59% and September’s 25.16% confirms persistent inflationary pressures in Turkey’s production sectors.
Energy and food sectors remain the largest contributors to the PPI rise, with manufacturing inputs also adding upward pressure. The PPI’s trajectory suggests that cost-push inflation remains entrenched, despite central bank efforts to stabilize prices.