Turkey's November inflation figures have once again highlighted the growing credibility crisis facing the country's economic statistics. According to the Turkish Statistical Institute (TÜİK), monthly inflation registered a modest 0.87%, bringing annual inflation to 31.07%. However, as reported by the T24 news site, the independent Inflation Research Group (ENAG) tells a starkly different story, reporting monthly inflation at 2.13% and annual inflation at a staggering 58.62%—nearly double the official figure.
This persistent gap between official and independent measurements has become a defining feature of Turkey's economic landscape, fueling public skepticism and complicating monetary policy effectiveness.
A 20-Year History of Missed Targets
As explained by the economist Mahfi Eğilmez, the Central Bank of the Republic of Turkey (TCMB) has maintained an inflation target of 5% for years, yet this goal has remained elusive for most of the past two decades. Only in 2009, 2010, and 2012 did actual inflation come close to the target. Even the more conservative Medium-Term Program (OVP) forecasts have consistently underestimated actual inflation rates.
The most dramatic deviation occurred between September 2021 and June 2023—a period when, paradoxically, the TCMB lowered interest rates despite surging inflation. This unconventional approach, often attributed to political pressure, transformed what was already a challenging situation into a full-blown crisis.
The Policy Coordination Problem
Turkey's inflation struggle extends beyond monetary policy failures. Fiscal policy has frequently undermined the central bank's efforts. Budget deficits reached 5.1% of GDP in 2023 and 4.7% in 2024, creating additional inflationary pressures. While the 2023 earthquake provided some justification for fiscal slippage, the continued high deficits in 2024 suggest deeper structural issues.
Looking ahead, the projected budget deficit below 3% of GDP for 2025 offers hope for better fiscal-monetary coordination. However, historical patterns warrant cautious optimism.
Why Targets Remain Out of Reach
According to Eğilmez, several factors explain the TCMB's persistent inability to achieve its inflation objectives despite favorable conditions such as controlled exchange rate movements and lower-than-expected oil prices:
First, public distrust in official inflation figures undermines the effectiveness of interest rate policies. When citizens believe actual inflation far exceeds reported numbers, they don't perceive offered interest rates as providing real returns.
Second, this credibility gap prevents the crucial anchoring of inflation expectations—a prerequisite for any successful disinflation program.
Third, money supply control remains inadequate, while public sector inefficiency and perceived waste reinforce expectations that inflation will persist.
The Path Forward
Turkey's inflation experience offers a clear lesson: sustainable price stability requires realistic target-setting combined with credible, consistent policy implementation. The current disconnect between official data, public perception, and policy outcomes creates a self-reinforcing cycle that makes disinflation extraordinarily difficult.
Until authorities address the credibility gap—both in statistics and policy commitment—Turkey's inflation battle will likely continue producing more disappointment than progress. The road to 5% inflation remains long, and without fundamental changes in approach, it may prove unreachable.
For more reading:
Yıllık enflasyon TÜİK'e göre yüzde 31,07, ENAG'a göre yüzde 58,62 oldu
https://t24.com.tr/haber/tuik-kasim-ayi-enflasyonunu-acikladi,1280742
Tutmayan Enflasyon Hedefleri
https://www.mahfiegilmez.com/2025/11/tutmayan-enflasyon-hedefleri.html
Photo: Gemini AI