As low and middle-income earners become dispossessed, the question of “who is doing the consuming” arises…

The economic crisis that has intensified since 2018, or more accurately, the transfer of capital to higher income groups, is leading to the dispossession of middle and lower income groups. Lower and middle-income groups are selling their movable and immovable property to make ends meet. Those in the agricultural sector who own property are selling their tractors, livestock and fields, while low-income groups in cities are liquidating their savings and selling their real estate, if they have any.

The government has transferred significant capital to a certain segment of society through both inflation and previous low-interest policies. During the low-interest period, they distributed very low-interest loans, became even wealthier with currency-protected deposits, and profited from the increase in foreign exchange. Income inequality has worsened.

Home ownership has fallen by 4 points in 11 years

Inflation, rising housing prices, and loan interest rates, combined with eroding wages and salaries, have made buying a home a distant dream for low-income individuals. Not only are they unable to buy homes, but they are also selling the ones they own. High-income groups are turning to luxury housing projects with their savings and interest earnings. There are no issues with projects targeting high-income groups.

This is also the reason for the moderate increase in home ownership rates in 2025, according to the Turkish Statistical Institute’s (TÜİK) latest Poverty and Living Conditions Statistics survey… As of 2025, the proportion of people living in their own homes increased by 1 percentage point to 57.1%. However, this rate remains below the peak of 61.1% reached in 2014. The proportion of tenants, which stood at 22.2% in 2014, reached 27% in 2024.

Home ownership rate is 69% in the EU, while it is 57% in our country

While the European Union average for home ownership is 69%, the global home ownership rate is estimated to be around 70%. The countries with the highest rates worldwide are as follows: Romania: 96%, Laos: 96%, Vietnam: 95%, Slovakia: 92%, Hungary: 91%, Singapore, Croatia, Lithuania, Cuba and North Macedonia: 90%, India: 87%. In these countries, home ownership is generally supported by cultural status symbols or government incentives.

Countries with low home ownership rates, including Turkey, are as follows: Switzerland: 42%, Germany: 46-50%, Austria: 55%, Denmark: 59%, South Korea: 58-60%…

Experts say that the government’s economic policies have led society into a housing crisis, with low-income earners having to take on debt just to pay rent, let alone buy a home.

While TOKİ projects are also geared towards luxury housing, the fact that millions of applications have been made for the 500,000 housing initiative, launched in response to the housing crisis and the increasing contribution of rents to inflation, highlights the situation. The Oksijen newspaper’s report that pensioners unable to pay rent are staying in cheap hotel rooms in Ankara for 200-300 lira per night is a heartbreaking aspect of the situation…

2025 record: how did car sales increase by 10.5%?

Last week, an interesting piece of data related to this topic was released. The news is as follows:

The Automotive Distributors and Mobility Association (ODMD) announced that in 2025, car and light commercial vehicle sales increased by 10.49 per cent compared to the previous year, reaching 1,368,000 units. This broke the all-time annual record. Vehicles in the C and B segments made up the majority of the market. The C segment achieved a 42.9 per cent market share with 465,750 units, while the B segment recorded a 26.5 per cent share with 288,746 units.

However, the main driving force behind the growth was the luxury segment. Sales in the luxury car market, which covers the D, E and F segments, increased by 34%, while growth in the A, B and C segments, which have relatively low tax rates, was limited to 6.7%.

So, with the middle classes shrinking, how is such a historic record being broken? How can the increase in luxury consumption and the full shopping centres, cafes and restaurants be explained at a time when not only cars but also the middle classes in society are weakening, purchasing power is falling dramatically and wages are being crushed by inflation?

Consumption is driven by those at the top of the income pyramid

Let’s look at the data: consumption is driven primarily by the top 10% and 20% of the income distribution. According to the Central Bank’s study from February last year, during periods of low interest rates, consumption among the high-income group increased by 60%, while it only increased by 20% among the low-income group. Even after monetary tightening, the consumption rate of high-income earners (16%) remained higher than that of low-income earners (12%). In summary, consumption is driven by high-income groups.

The lower and lower-middle classes, on the other hand, are constrained by food, rent, and transport expenses. Luxury consumption (cars, restaurants, holidays) is driven by the top 10-20%.

The final week of the year saw the release of important data. Income distribution and poverty… The situation is as follows: The top 10% receive 32.8% of the income, and the second 10% receive 15.2%… The third 10% receive 11.6%.

The bottom 10% receive 2.4%, the second 10% receive 3.6%, and the third 10% receive 4.6%…

The Poverty and Living Conditions Statistics, which we detailed last week, clearly illustrate the situation.

Low-income groups spend on essential needs, and they do so by borrowing.

This leads to the middle class struggling to spend on basic needs (food, rent, education) and being unable to save. While the expenses of the lower and middle classes with fixed incomes increase with inflation, salaries rise below inflation, accelerating impoverishment.

Furthermore, low- and middle-income groups continue to consume using credit cards. In other words, they are trying to survive by borrowing and depleting their savings. The contribution of the lower and middle classes to consumption (basic needs) is also debt-driven.

Let’s move on to the 10.5 per cent increase in car sales in 2025, which is a historic record… Looking at the increase in luxury segment sales, this record can be explained more by the individual purchases of the segment that has become wealthier through corporate and capital transfers. The contribution of the upper-middle class can be explained by their shift towards relatively lower-priced commercial vehicles and cars, as buying a home is a distant dream. The tradespeople segment is purchasing commercial vehicles for business and investment purposes, while those with savings are upgrading their existing models by adding a little extra.

Here are the key developments from last week:

Inflation reached 30.89 per cent in 2025

We bid farewell to inflation exceeding 30 per cent in 2025. According to TÜİK data, inflation rose by 0.89% on a monthly basis in December 2025, while it stood at 30.89% on an annual basis. It increased by 34.88% based on the 12-month average. In December, inflation fell to its lowest level in the last 49 months. Inflation targets were not met, but Treasury and Finance Minister Mehmet Şimşek stated that the disinflation process was spreading across the board, saying, ‘Annual inflation, which has fallen by 40 points in the last 12 months, has dropped to 35.4 per cent, its lowest level since November 2021.’ The CPI rates by year are as follows:

2025: 30.89%

2024: 44.38%

2023: 64.77%

2022: 64.27%

2021: 36.08%

2020: 14.60%

2019: 11.84%

2018: 20.30%

2017: 11.92%

2016:  8.53%

2015:  8.81%

The rates of increase in the three main expenditure groups with the highest weight are as follows: food and non-alcoholic beverages 28.31%, transport 28.44% and housing 49.45%. The effects of these main groups on annual change are as follows: 7.07% for food and non-alcoholic beverages, 4.36% for transport, and 7.52% for housing. According to TÜİK data for December 2025, the highest increases in consumer prices were 11.38 per cent for fresh fish, 6.92 per cent for potatoes and 6.86 per cent for non-alcoholic beverages, while the largest price decrease was 32.95 per cent for passenger transport by air.

“The main factor keeping inflation above 30 per cent is service inflation”

Finance Minister Mehmet Şimşek stated that the service sector was proving resilient in the face of inflation, saying:

“The main factor keeping inflation above 30 per cent continues to be service inflation, with education and rent items being particularly decisive in this regard. Education inflation stood at 66.3 per cent, compared to 91.6 per cent at the end of 2024. With the impact of rule-based regulation on private school fees, we expect a more pronounced decline in education inflation in the coming period. Rent inflation, meanwhile, fell to 61.6 per cent on an annual basis, down from 105.8 per cent in 2024. With the increase in housing supply, we anticipate that the decline in this item will continue.

Pension payments and civil servant salaries have also been determined

Along with the 2025 inflation rate, the rate of increase for pension payments and civil servant salaries has also been determined. The inflation difference that SSK and Bağ-Kur pensioners will receive has been set at 12.19%. Accordingly, the lowest pension has been increased by 12.19% to 18,938 TL. 

Civil servant salaries and civil servant pensioners’ monthly payments have been increased by 18.60%. Thus, the lowest civil servant pension will rise to 26,887 TL. The lowest civil servant salary will increase to 59,896 TL. With a flat-rate increase of 1,000 TL, the civil servant pension will rise to 27,887 TL, and the civil servant salary will rise to 60,896 TL.

However, it is rumoured that the government is planning new regulations for the minimum pension. According to NTV reporter Özgür Akbaş, “It is stated that there will be a 27.36 per cent increase, equivalent to the rate of increase in the minimum wage. It is claimed that nearly 4 million pensioners will receive a minimum pension of 21,500 TL. The impact on the Treasury is estimated to be 10 billion 248 million TL. A bill on the matter will be submitted to the Presidency of the Grand National Assembly of Turkey on 9 January.

TÜRK-İŞ: Pensioners below the poverty line

According to TÜRK-İŞ’s December “Poverty and Hunger Line Survey”, the lowest pension, even with the increase, remained approximately 11,000 TL below the poverty line of 30,143 TL.

Özgür Özel, leader of the main opposition party CHP, stated, ‘The pension is no longer a salary, it’s pocket money.’

Salaries of the President, ministers and MPs also announced

Along with the salary increases, the salaries of the President, ministers and MPs have also been announced. As of January, President Recep Tayyip Erdoğan’s salary after the increase will be 312,718 TL. In addition, Erdoğan, who is a retired member of parliament, will receive 177,658 TL per month from this source, bringing his total income to 490,000 TL.

With the increase, the salary of ministers serving in the cabinet has become 280,135 TL. If those serving as ministers retire, their total monthly income will increase to 456,993 TL.

MP salaries for 2026 have risen to 273,196 TL. Retired MP salaries are now 177,658 TL. During this period, the salary for those who are both MPs and retired will rise to 450,000 TL.

Home care allowance set at 13,878 TL

Minister of Family and Social Services Mahinur Özdemir Göktaş made statements regarding social support payments for 2026. According to Göktaş’s statement, the home care allowance has been set at 13,878 lira, in line with the increase in the civil servant salary coefficient. The social economic support payment has risen to 9,723 lira. The monthly payment made to foster families per child has been increased to an average of 15,533 lira, while the monthly payment made to patients with severe silicosis has been raised to 14,042 lira. Göktaş said, ‘For the January-July period of 2026, Home Care Assistance rose from 11,702 lira to 13,878 lira. In 2025, we provided a total of 67.7 billion lira in Home Care Assistance.’

Public debt boosted banks’ interest income

Interest paid by citizens forced to live on credit and credit cards filled the banks’ coffers. As the repayment crisis deepened, interest earned by banks on bad loans rose from 44.2 billion to 101.7 billion. According to a special report by Havva Gümüşkaya in Birgün, BDDK data shows that banks’ interest income increased by 42.2 per cent in the January-November period, reaching 7 trillion 550 billion lira. Interest on loans accounted for 63 per cent of banks’ interest income.

During this period, banks’ interest income from consumer loans grew by 40 per cent to 649.6 billion lira. Banks’ interest income from credit card usage also increased by 48 per cent from 305.9 billion lira in November 2024 to 453.4 billion lira in November 2025.

Meanwhile, the ratio of non-performing loans to total cash loans rose from 1.80 per cent in November 2024 to 2.43 per cent. The repayment crisis that began during the economic downturn effectively doubled the interest income banks earned from non-performing loans. Interest earned on non-performing loans, which stood at 44.2 billion lira during this period, reached 101.7 billion lira in November this year. Interest income earned by banks from non-performing loans increased by 130.3 per cent.

The banking sector’s net profit rose by 45 per cent in the first 11 months of the year compared to the same period last year. The sector’s total net profit reached 842.8 billion lira.

Bad debts doubled

According to BDDK data, bad debts, which refer to debts that banks cannot collect and have given up hope of collecting, peaked during the year. The amount of bad debts, which stood at 116 billion 457 million TL at the beginning of 2025, rose to 236 billion 448 million TL by the end of the year.

 The increase exceeded 103 per cent. The amount of loans in default rose from 59 billion 756 million TL to 113 billion 984 million TL, while credit card debt rose from 56 billion 750 million TL to 122 billion 463 million TL.

Of the 113 billion 984 million TL in non-performing loan debt, 112 billion 463 million TL consisted of consumer loans used primarily by salaried individuals.

New record on the stock market; BIST 100 closed at 12,087

The BIST 100 index on the Istanbul Stock Exchange gained 0.49 per cent on Thursday, 8 January, closing at 12,087.97 points, a new record high. The BIST 100 index, which reached 12,152.59 points during the day, increased by 59.13 points compared to the previous close, while the total trading volume was 149.1 billion lira.

As of 8 January, the BIST 100 index rose by 5.13 per cent over the past week, 7.99 per cent over the past month, and 21.97 per cent over the past year.

The US dollar made a comeback in the first week

The dollar started the year strongly. The dollar index rose to 98.9 on Thursday, 8 January, reaching its highest level in the last month. The dollar index, which measures the value of the US dollar against the euro, Swiss franc, Japanese yen, Canadian dollar, British pound and Swedish krona, fell by 9.4 per cent in 2025, recording its fastest decline since 2017.

Furthermore, the dollar is strengthening against the euro. The euro/dollar parity reached 1.17. This is the lowest level for the euro since December 2025, with the euro losing 0.6 per cent of its value over the week.

 In the US, jobless claims rose slightly last week to 208,000, while layoffs fell to 35,553 in December, the lowest level since July 2024. This indicates that the labour market is strong and fears of a near-term slowdown are diminishing.

In October, the trade deficit fell to $29.4 billion, the lowest level since June 2009, and well below the $58.1 billion forecast, as imports fell to their lowest level in 21 months and exports hit a record high due to fluctuations caused by customs duties. Furthermore, markets are pricing in a roughly 90 per cent probability that the US Federal Reserve (Fed) will keep interest rates steady. All these factors have contributed to the strengthening of the dollar.

Oil rises with 2026

Oil prices rose in the first week of the year. February-dated West Texas crude oil reached $58.28 on Thursday, 8 January. West Texas oil gained 1.81 per cent in value during the week. March-dated Brent crude oil also rose to $61.99 per barrel, gaining 3 per cent in value over the week.

Despite strong US physical stocks, the market shifted to a buyer position, taking into account short-term supply risks. In particular, the market was buoyed by the US’s announcement of plans to exert greater control over crude oil sales through its intervention in Venezuela and to intensify sanctions by seizing Venezuela-linked tankers.

S&P 500 and Dow Jones started the year by setting new historical records

Wall Street started the year with new records. On Tuesday, 6 January, the Dow Jones and S&P 500 set new records. The S&P 500 reached 6,944 points on Tuesday, while the Dow Jones hit 49,462 points, setting new records. On Thursday, 8 January, the market closed slightly lower, with the S&P 500 at 6,921 and the Dow Jones at 49,266 points. The weekly increase in the S&P 500 was 1.83 per cent, and 2.5 per cent since the beginning of the year. 

Expectations of an interest rate cut by the Fed and expectations of profit growth continued to support the market.

Alongside the rise in energy and defence stocks following the military move against Venezuela, semiconductors led the gains as investors returned to chipmakers; Micron, Texas Instruments, Analog Devices and NXP gained between 5-10 per cent.

Famous investor issues alarming market warning

Meanwhile, renowned investor Jim Rogers stated that a major correction is imminent following the prolonged rally in US markets. Rogers noted that developments in Venezuela could impact US markets, stating, ‘All stocks are high,’ and revealed that he only holds Chinese and Uzbek stocks in his portfolio.

Crisis prophet issues Venezuela warning: The game is changing

Renowned investor Michael Burry, known for predicting the 2008 global crisis, stated that the US operation against Venezuela is a “game changer” that will shake global balances in the medium and long term, contrary to the calm seen in the markets. According to Burry, the move, which resulted in Maduro’s abduction, carries serious geopolitical and economic consequences that have not yet been priced in.

The US trade deficit has fallen to its lowest level since 2009

The US trade deficit narrowed sharply in October 2025, falling to $29.4 billion. This is well below the revised September figure of $48.1 billion and the $58.1 billion deficit forecast, and is the lowest deficit since June 2009.

The implementation of customs duties led to significant declines, particularly in imports of non-monetary gold and pharmaceutical products. Exports of non-monetary gold and other precious metals, however, rose by 2.6 per cent to a record $302 billion.

Eurozone unemployment rate unexpectedly fell to 6.3 per cent

The unemployment rate in the Eurozone fell from 6.4 per cent in October to 6.3 per cent in November 2025. Analysts had expected the rate to remain steady at 6.4 per cent. The number of unemployed fell by 71,000 compared to the previous month to 10.937 million, the lowest level since April. 

Meanwhile, the youth unemployment rate, which reflects job seekers under the age of 25, fell from 14.8% in October to 14.6% in November. Among the bloc’s largest economies, Germany (3.8 per cent) and the Netherlands (4 per cent) recorded the lowest rates, while Spain (10.4 per cent), France (7.7 per cent) and Italy (5.7 per cent) recorded the highest rates.

Meanwhile, in Germany, the number of unemployed rose by 23,000 in December 2025 compared to the previous month due to the weak economy and the winter holidays, with the labour market seeing its worst December figures since 2010.

Other important developments are as follows:

A memorandum of understanding was signed between TPAO and the American company ExxonMobil. Energy Minister Alpaslan Bayraktar stated, ‘It covers new exploration areas in the Black Sea and the Mediterranean, as well as other potential international areas to be mutually agreed upon.’

Çeşmeli Port, the former NATO reception port in the Marmaraereğlisi district of Tekirdağ, and the immovable properties in the port’s hinterland will be privatised for 45 years through a ‘transfer of operating rights’ method. The Privatisation Administration has set the provisional guarantee amount required for participation in the tender at 70 million TL.

More than half of salaries went to inflation and taxes. According to a report by DİSK-AR, in 2025, inflation and the increasing tax burden caused at least 2.5 trillion TL to be eroded from the wages of more than 17 million workers. More than half of the average wage was lost to deductions, taxes and inflation.

Goldman Sachs warned that sharp fluctuations in silver prices could continue following last year’s historic rally. According to the bank, tight physical stocks and global uncertainties are keeping silver volatility high.

The US public debt-to-GDP ratio reaching 120 per cent has prompted economists to increase their warnings about ‘fiscal dominance’. Former Fed Chair Janet Yellen expressed concern that we are entering a period where monetary policy could be rendered ineffective due to the budgetary burden of debt exceeding $38 trillion.

Copper prices hit an all-time high of $6.06 per pound on international markets amid supply concerns. Copper prices were particularly affected last year by US President Donald Trump’s policies and supply concerns.