Turkish consumer price inflation rose to 1.84% month-on-month in August, just below expectations, while the annual figure was 31.51%, data from the Turkish Statistical Institute showed on Thursday.
In a Reuters poll, the monthly inflation rate was forecast to be 1.93% and the annual rate 31.62%, as rising oil prices driven by the Iran war continue to pose an upward risk to inflation.
Price rises in August were led by education fees which rose more than 8%, beverages and tobacco products which rose some 7%, and transportation which rose 4.8%.
In order to limit the impact of volatility in oil prices, Turkiye removed a special consumption tax on diesel through the end of August, after which the tax will be gradually reinstated. Gasoline and liquefied petroleum gas will remain under a sliding-scale fuel tax system until October 1 to ease the rise in prices.
In July, consumer prices rose 1.78% month-on-month and 31.75% year-on-year.
Following the release of the data, Turkish Finance Minister Mehmet Simsek said in a post on X that the government continues its structural policies to ensure permanent price stability.
Late last month, Turkey's central bank resumed one-week repo auctions, which have been suspended since March in order to control the inflationary impact of the Iran war. Turkish lira overnight interest rates dropped to 37% from the previous 40%.
Economist Haluk Burumcekci from Burumcekci Research and Consultancy expects the central bank to maintain the policy rate in the next meeting at 37%.
"For the remainder of the year, we expect the central bank to have very limited room for policy rate cuts due to continued global uncertainties, with cuts of 100bps at each of the October and December meetings," Burumcekci said in a note.
In August, Turkiye's central bank raised its inflation forecast for the end of 2026 to 28% from 26% driven by the developments in energy prices.
Markets in general expect the central bank to leave its policy rate unchanged at its next meeting on September 10. However, investors are closely monitoring new tensions in the Iran war.
The data also showed the domestic producer index rose 2.57% month-on-month in August for an annual increase of 27.95%.
Separately, Turkey's trade deficit widened 22.3% year-on-year in August to reach $5.2bn, Trade Minister Omer Bolat said on Thursday.
Bolat said imports in August rose by 10.5% to $28.7bn and exports rose 8.1% to $23.5bn.
The current account balance is expected to record a surplus in August, according to the presentation of the trade minister.
