CBRT Announces: Inflation Expectations Continue to Decline

The Central Bank of the Republic of Turkey (CBRT) has released its report containing sectoral inflation expectations for October. This report includes the future inflation expectations of various segments of the economy, gathering the views of market participants, the real sector, and households.

Sectoral Inflation Expectations are based on the results of the Market Participants Survey, Economic Outlook Survey, and the Consumer Trends Survey conducted in cooperation with the Turkish Statistical Institute. These surveys provide information on the expected annual consumer inflation for the next 12 months from financial and real sector experts, manufacturing firms, and households.

Decrease in inflation expectations of market participants: In the next 12 months, inflation expectations vary across different sectors. The 12-month annual inflation expectations of market participants have decreased by 0.1 points compared to the previous month, settling at 27.4%. This decline reflects a more optimistic outlook on inflation among market participants.

Analyses conducted on the Turkish economy show that market participants hold positive views regarding these expectations. It is particularly anticipated that the impact of economic policies on inflation will diminish, which increases market confidence.

Changes in real sector forecasts: From the perspective of the real sector, the expectations for annual inflation in October 2024 have decreased by 1.6 points to 49.5%. This decline indicates that actors in the real sector are becoming more optimistic about economic conditions.

Real sector experts state that the decreasing trend in production costs positively affects inflation expectations. Additionally, expectations that price pressures will ease with increased production capacity in the industrial sector are creating a more favorable atmosphere in this area.

Household expectations decline: Meanwhile, a significant decrease has also been observed in household inflation expectations. The household's 12-month annual consumer inflation expectation has decreased by 4.4 points to 67.2%. This reduction strengthens consumers' belief that future inflation rates will decline.

The drop in household inflation expectations also positively impacts the consumer confidence index. Research indicates that with the decrease in inflationary pressure, consumers expect an improvement in their purchasing power.

Decrease in the proportion of those expecting inflation to fall: The report also noted a decrease in the proportion of households anticipating a decline in inflation over the next 12 months. This rate, which fell by 0.7 points compared to the previous month, stands at 28.3%.

This reduction in household expectations for a decline in inflation indicates that uncertainties in the economic outlook still exist. However, the overall positive sentiment suggests developments that will contribute to the economic recovery process.