Turkey's annual inflation edged up to 29.77% in October from 29.73% in September, the Turkish Statistical Institute (TurkStat) said on Tuesday, Nov. 3, ending a run of declines and coming in above economists' forecasts. Consumer prices rose 2.58% from September, Daily Sabah reported, citing the official data.

A poll of 21 economists by state-run Anadolu Agency Finans, reported by Hurriyet Daily News before the release, had called for annual inflation to slow to 29.28% and for a monthly rise of 2.2%, with individual estimates running from 1.25% to 2.7%. The monthly figure landed near the top of that range. The central bank's own survey of market participants had pointed to monthly inflation of about 2.1% and an annual rate of 29.2%, Turkiye Today reported.

The print is the first since the Central Bank of the Republic of Turkiye cut its policy rate by a full percentage point to 36% on Oct. 22. For investors in Asia who hold lira bonds or Turkish bank and exporter equities, it is a data point on how far price growth has slowed while energy prices stay high.

What drove October's prices

Housing, water, electricity, gas and other fuels rose 40.24% from October 2025, contributing 4.71 percentage points to the annual rate, according to the TurkStat figures reported by Daily Sabah. Transportation prices were up 36.39% on the year, adding 6.1 points. Food and non-alcoholic beverages, the heaviest group in the basket, rose 27.73% and contributed 6.81 points.

Education posted the steepest annual increase at 48.86%, followed by health at 43.29% and insurance and financial services at 31.41%. Clothing and footwear had the smallest annual rise, at 13.38%.

The 12-month moving average inflation rate stood at 31.23%, and prices were up 27.52% since December 2025. Annual inflation remains below the 32.87% recorded in October 2025.

Early October numbers from Istanbul, Turkey's largest city and commercial hub, had already signaled faster monthly price gains. The Istanbul Chamber of Commerce said retail prices in the city rose 2.5% in October, up from 2.1% in September, led by a 10.6% monthly rise in clothing and footwear, Turkiye Today reported.

Central bank cut to 36% on weak demand

At its Oct. 22 meeting, the Monetary Policy Committee lowered the one-week repo auction rate to 36% from 37%. It also cut the overnight lending rate to 39% from 40% and the overnight borrowing rate to 34.5% from 35.5%, the bank said in its statement.

The committee said recent inflation figures and leading indicators "confirm the deceleration in the underlying trend of inflation." It added that economic activity data and the limited pass-through of supply shocks to prices showed domestic demand was weak. The statement also kept a warning: elevated energy prices tied to geopolitical tensions remain an upside risk, and policy would be tightened if the outlook deteriorated significantly and persistently. Steps will be set meeting by meeting, the bank said, with a medium-term target of 5% inflation.

The meeting summary, published Oct. 30, showed industrial production fell 1% in August from July after adjusting for seasonal and calendar effects. Gross international reserves fell by US$9.6 billion between Sept. 11 and Oct. 16 to US$169.1 billion, and Turkey's five-year credit default swap premium rose to 251 basis points as of Oct. 21.

September's reading had given the bank room to move. Prices rose 1.84% that month, and annual inflation fell to 29.73%, the lowest since November 2021, according to Trading Economics. The bank's core C index, which strips out energy, food, alcohol, tobacco and gold, slowed to 28.70% in September. Energy ran the other way: energy prices jumped 6.25% in September on higher fuel costs and refinery margins, according to the meeting summary.

Turkey has been moving in the opposite direction from several central banks in the region and in Asia. Egypt's central bank raised its overnight deposit rate to 20% on Oct. 29, part of a wider shift that has seen Asia's central banks swing toward tightening as energy costs feed through.