Turkey’s consumer price index (CPI) inflation officially stood at 47.1% y/y in November versus 48.6% y/y in October, the Turkish Statistical Institute (TUIK, or TurkStat) said on December 3 (chart).

TUIK’s inflation series peaked at 75.45% in May. Subsequently, it quickly fell back to the 40%s thanks to the base effect.

The data compilation efforts of Turkey's infamous statistical institute remain under scrutiny, with few Turks believing the official inflation data. Putting out a headline figure of below 40% would perhaps prove a bridge too far even for TUIK.

At the official rate of 47% y/y, Turkey remains in sixth place in the world inflation league.

The Istanbul-based ENAG inflation research group of economists, meanwhile, calculated a Turkish inflation figure of 87% y/y for November. The ENAG figures recorded for May and October were 121% y/y and 90% y/y, respectively.

TUIK also gave an official figure of 29% y/y for producer price index (PPI) inflation in November.

Central bank tracks monthly

TUIK also posted monthly official inflation of 2.24% for November after releasing 2.88% for October.

On December 4, TUIK will release seasonally-adjusted inflation figures that were released at 2.51% for October and 2.73% for September (revised down from 2.80%).

In the coming months, TUIK is set to deliver further outcomes in the 1-2%s for the official monthly headline indicator.

The central bank also tracks inflation expectations via its monthly "Sectoral Inflation Expectations" and "Survey of Market Participants" releases.

Another miss

On November 8, the central bank hiked its end-2024 official inflation "target" to 44% y/y in its latest quarterly inflation report from the previously "targeted" 38% y/y.

The upper boundary of the forecast range was also moved up to 46% y/y from 42% y/y.

During a press conference, central bank governor Fatih Karahan said that the regulator sees official annual inflation at 42% (the upper boundary of the previous end-2024 target) in January and at 38% (the previous target) in March.

The central bank also expected that unadjusted monthly inflation for November and December would be released at levels a little bit higher than the 1.5%-level, while the seasonally-adjusted figures would come out at levels around the 2.3%s or a little bit above 2%.

As TUIK released 2.24% monthly inflation for November, the central bank has to clock up another miss.

A 1.6% m/m inflation release for November would have meant a 46% annual inflation figure. However, a November figure of 47.1% still provides the space up to 2.5% for a rate cut.

The seasonally-adjusted monthly inflation figures will edge up a little in 1Q25 (due to wage hikes and new year price/fee updates), according to the governor.

It is foreseen that they will, meanwhile, fall below the 1.5%-level starting from 3Q25 and end the year in and around the 1.3%s (closer to the 1%-level).

December 26?

The next monetary policy committee (MPC) meeting is scheduled for December 26. On November 21, at its last meeting, the authority kept its policy rate unchanged at 50% for an eighth straight month in line with market expectations.

On November 29, TUIK said that Turkey had entered a technical recession with the 3Q official GDP release.

As things stand, a rate cut on December 26 remains on the cards.

Key markets around the world will still be on their Christmas break come December 26. Dealing with  immediate impacts of a rate cut would therefore be  easier for Turkey's economic officials.

On January 3, while the markets will still be dealing with new-year hangovers, TUIK will release official inflation for December. A 2% m/m release would mean 45.8% as official annual inflation for the last month of the year.

On the other hand, the central bank may decide that there is no need to penny-pinch and that it can wait until its January meeting to launch the rate-cutting cycle.

ECB to cut on December 12

Looking at the global markets, the November stress and the US election tensions are losing their grip. The new year rally is awaited. An easing atmosphere will be more strongly felt.

On November 7, the Federal Reserve (Fed) delivered another 25bp rate cut. Since September, it has delivered two rate cuts, bringing the upper limit of its federal funds target range to 4.75% from 5.50%.

The Fed’s next rate-setting meeting will be held on January 29.

The European Central Bank (ECB) has, meanwhile, delivered three rate cuts. They brought its deposit facility rate to 3.25% in October from 4.00% in June.

On December 12, the regulator will hold its next rates meeting. It is expected to deliver another rate cut.

Turkey’s CDS remain below the 300-level, while the yield on the Turkish government’s 10-year eurobonds is hovering around the 7%-level.

Since end-August, the Erdogan regime has turned to its straight-line policy in the USD/TRY rate. The pair is currently drawing a line around the 34-level.

The Erdogan regime's smooth nominal devaluation and real lira appreciation policy remain on track.