Turkey’s consumer price index (CPI) inflation officially stood at 48.6% y/y in October versus 49.4% y/y in September, the Turkish Statistical Institute (TUIK, or TurkStat) said on November 4 (chart).

TUIK’s inflation series peaked at 75.45% in May. It has quickly fallen back to the 40%s thanks to the base effect.

However, putting out a headline figure of below 40% would perhaps prove a bridge too far even for the country’s infamous statistical institute.

At 49% y/y, Turkey remains at sixth place in the world inflation league.

The Istanbul-based ENAG inflation research group of economists, meanwhile, calculated a Turkish inflation figure of 90% y/y for October. The ENAG figures recorded for May and September were 121% y/y and 89% y/y, respectively.

TUIK also gave an official figure of 32% y/y for producer price index (PPI) inflation in October.

Central bank tracks monthly inflation

TUIK also posted monthly official inflation of 2.88% for October after releasing 2.97% for September.

On November 5, TUIK will release seasonally-adjusted inflation figures that were released at 2.80% for September and 2.83% for August.

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.

End-2024 inflation at above 42% y/y

On August 8, Turkey’s central bank kept its end-2024 official inflation "target" unchanged at 38% in its latest quarterly inflation report.

The upper boundary of the forecast range was also left unchanged at 42%.

The inflation report also reiterated that average "seasonally-adjusted" official monthly inflation would decline to 2.5% in 3Q24 (realisation: 3.06%) and to below 1.5% in 4Q24.

On November 8, the central bank will release its next inflation report and updated forecasts.

As things stand, the Erdogan regime is getting ready to release an official inflation figure at above 42% y/y for December.

Easing delayed to Q1

In October, the monetary policy committee (MPC) of Turkey’s central bank kept its policy rate unchanged at 50% for the seventh straight month in line with market expectations.

The next MPC meeting is scheduled for November 21. The rate-setters at this point look poised to again stick with the 50% benchmark.

In the current circumstances, expectations regarding the beginning of the easing cycle have been delayed from 4Q24 to 1Q25.

On November 29, TUIK will release its official GDP data for 3Q24. Figures that declare a technical recession has taken hold are on the cards.

Fed to cut on November 7

Looking at the global markets, the European Central Bank (ECB) has so far delivered three rate cuts that brought its deposit facility rate to 3.25% on October 17. It stood at 4.00% in September 2023, 3.75% on June 12 and 3.50% on September 18.

The Federal Reserve (Fed) is also expected to introduce another 25bp rate cut at its next open market committee meeting, set to be held on November 7.

So far in its easing, the Fed has delivered a cut amounting to 50bp. It brought the upper limit of its federal funds target range to 5.00% on September 18 from 5.50% in July 2023.

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

A smooth turbulence due to seasonal fluctuations prior to the beginning of the new year rally along with the presidential elections in the US scheduled for November 5 is currently in play. It could get stronger in response to the election outcome.

However, with the beginning of the new year rally, the easing atmosphere will be more strongly felt.

Smooth nominal devaluation, real appreciation

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.

With September, carry trade inflows and eurobond sales resumed. The regime exploited the window for renewed inflows prior to the possible shake-up in November.

As things stand, the regime's smooth nominal devaluation and real lira appreciation policy remains on track.