Turkey’s inflation rate decreased for the eighth straight month in January, reaching its lowest point since June 2023, signaling a modest improvement in controlling the country’s ongoing economic challenges.
The Turkish Statistical Institute reported that the year-on-year inflation rate for January stood at 42.1%, down from 44.4% in December, though still surpassing the market estimate of 41.3%.
Inflation across most categories slowed, with food and non-alcoholic beverages seeing a decrease to 41.8% in January, compared to 43.6% in December. Prices for water, housing, electricity, gas, and other fuels also edged lower.
One of the more significant drops was seen in recreation and culture, which fell to 33.1% in January, down from 37.6% the previous month. Footwear and clothing prices also saw a notable reduction, dropping from 32.3% in December to 27.5% in January. Additionally, inflation for transport, household maintenance, and furnishings also slowed.
Core inflation, which excludes food and energy prices due to their volatility, decreased to 42.7% in January—the lowest level in two years.
However, month-on-month inflation saw a rise of 5% in January, marking the largest increase since January 2024. This was higher than the 1% rise in December and above the expected 4.4%. The jump was largely attributed to an increase in the minimum wage. Despite the recent positive inflation trends, significant challenges remain for Turkey’s economy.
President Recep Tayyip Erdoğan had previously pushed for an economic policy of lowering interest rates to curb inflation, a strategy that was at odds with approaches taken by other major central banks. The central bank eventually raised interest rates, which is believed to have contributed to the easing of inflation.
Despite the improvement, Turkey’s inflation rate remains high compared to other nations. The country’s consumer confidence index also declined slightly in January, dropping to 81 from 81.3 in December, reflecting reduced optimism regarding financial situations and durable goods spending.
