Levent Gürses
As inflation begins to rise again, this time the excuse is the war in Iran. Yet the war is affecting the whole world, and despite minor fluctuations, inflation exceeding 30 per cent is being seen in a handful of countries.
According to TurkStat (Turkish Statistics Institute) data, the Consumer Price Index (CPI) rose by 4.18 per cent in April. Annual inflation was recorded at 32.37 per cent. This rate marks a record high for the past six months. In other words, we’ve come full circle: whilst the disinflation programme implemented over the past three years has failed, inflation has consistently remained above 30 per cent throughout this period.
In the first four months, inflation reached 14.64 per cent. This indicates that the 2026 inflation target of 16 per cent has become unattainable. It is highly likely that the year-end target of 16 per cent will be exceeded in May. The actual monthly rates are as follows: January 2026: 4.84 per cent. February 2026: 2.96 per cent. March 2026: 1.94 per cent. April: 4.18 per cent.
Inflation is hitting low-income groups particularly hard. Consumer prices rose by 3.70 per cent for food, 4.29 per cent for transport, and 7.99 per cent for housing, water, electricity, gas and other fuels. The annual changes were 34.55 per cent, 35.05 per cent and 46.60 per cent respectively. These figures are well above the annual inflation rate of 32.37 per cent…
No interim pay rise for pensioners or the minimum wage
Meanwhile, the lowest pension lost 2,928 TL in April, whilst the minimum wage eroded by 4,110 TL against inflation. Despite this, the ruling party shut the door on low-income earners by stating, “An interim pay rise is not on our agenda.”
Appearing before MPs at the Parliament’s Planning and Budget Committee, CBRT Governor Karahan attributed the high inflation to a ‘war’.
Turkey’s inflation record: First in Europe, fifth in the world
Turkey ranks fifth globally with an annual inflation rate of 32.37 per cent, and first in Europe for both annual and monthly inflation. The annual inflation rates of the 31 countries in Europe are all lower than the monthly rate of 4.18 per cent recorded in Turkey in April alone.
According to the ranking based on annual inflation, Turkey stands out as the country with the fifth-highest inflation, following Venezuela (649 per cent), South Sudan (113 per cent), war-torn Iran (50 per cent) and Argentina (32.6 per cent).
In Ukraine, which has been at war with Russia for years, inflation stands at 7.9%
Turkey ranks first in Europe for both annual and monthly inflation. Romania follows in second place with 9.9%.
In Ukraine, which has been at war with Russia for years, inflation stands at 7.9 per cent. Across Europe, the annual inflation rates of 31 countries are lower than the monthly rate of 4.18 per cent recorded in Turkey in April. Within the European Union (EU), the average annual inflation rate stands at 2.3 per cent.
Mehmet Şimşek: Diesel was set to reach 90 lira, but we kept it below 73 lira
Finance Minister Mehmet Şimşek, speaking about the escalator system introduced to limit the impact of rising oil prices on fuel prices, said: “We waived the fixed excise duty on fuel to limit the shock to citizens. Without the escalator system, diesel would be 89.4 lira today. It is currently 72.7 lira.”
Energy prices have hit an all-time high
Natural gas, electricity, petrol, diesel and LPG prices have hit an all-time high following recent increases. Natural gas took the top spot in terms of price increases. According to a report by Birgün newspaper, the average price increase for natural gas in April was 44.47 per cent month-on-month and 94.71 per cent year-on-year. The annual cost of ongoing subsidies for electricity, natural gas and fuel is estimated at 1 trillion TL. The energy and economic management aim to reduce subsidies gradually. This implies further price hikes for energy.
Şimşek: We do not foresee any changes to the programme
Finance Minister Mehmet Şimşek stated, “We are facing a major global shock; nevertheless, we have never envisaged any changes to the programme’s priorities.”
Şimşek noted that prior to the war, Turkey’s current account deficit as a percentage of GDP was below 2 per cent, adding that whilst this would increase slightly, they viewed it as manageable.
Noting that Turkey entered this process with substantial buffers and improved macroeconomic balances, Şimşek added:
“Of course, reserves are also needed for resilience to shocks. They had risen above 210 billion dollars before the war and currently stand at around 165–166 billion dollars. This is important because, in fact, you build these buffers for this very purpose. In many respects, Turkey’s reserve adequacy continues. Normally, you need reserves to cover three months’ worth of imports. Even in its current state—and even at this reduced level—our reserves correspond to more than five months’ worth of imports.”
Karahan: Although the war has affected the disinflation process…
Central Bank Governor Fatih Karahan noted that geopolitical developments and the war are negatively affecting inflation through energy prices, whilst stating that the Central Bank will not compromise on its price stability target. “Although the war affects the disinflation process, it does not alter our resolve,” said Karahan, adding that they would not allow the deterioration in inflation to affect the medium-term outlook through tight monetary policy.
BBVA raises inflation forecast to 30 per cent
Spanish banking group BBVA, in its latest assessment, highlighted a broad-based deterioration in inflation dynamics and raised its year-end 2026 inflation forecast from 28.5 per cent to 30 per cent.
According to a report on CNBC-e, the institution emphasised that the rise in headline inflation is no longer confined to specific items but has spread to a wider range of goods and services.
Seasonally adjusted data showed that energy, food and essential goods played a decisive role in monthly price increases, whilst it was stated that the deterioration in core inflation stemmed particularly from essential goods groups.
Stagflation is on the horizon, a revision is inevitable
Prof. Dr. Hayri Kozanoğlu, a columnist for Birgün Newspaper, emphasised that all economic data points to a stagflation scenario where inflation emerges amidst a recession. Prof. Dr. Kozanoğlu stated:
“As demand weakens and purchasing power declines, inflation cannot be contained. In such an environment, reviving the economy by cutting interest rates is becoming increasingly impossible.
While the economic management consoles companies with tax cuts, it turns a deaf ear to the complaints of the public. An upward revision of the inflation target in the Inflation Report to be announced on 11 May appears inevitable. Once it becomes certain that the target cannot be met, any subsequent move will hold little significance.”
Decline in CBRT reserves continues
Central Bank reserves recorded a further decline last week, following the drop in the previous week. Reserves fell by 5 billion 569 million dollars in the week of 1 May, reaching 165.5 billion dollars.
607 billion TL has vanished from workers’ pockets
According to DİSK-AR’s April Wage Loss Monitoring Report, workers’ total losses due to inflation and taxes exceeded 607 billion 153 million TL in the first four months of the year. Workers spent at least 11 days of last month working to cover inflation and tax costs.
Oil prices back above $100…
Oil prices fell for three consecutive days last week (Tuesday, Wednesday and Thursday), dropping below the critical $100 mark.
The price of a barrel of Brent crude fell below $100.
The prospect of a ceasefire and nuclear negotiations between the US and Iran caused the price of Brent crude, which had risen to $114.40 per barrel on Tuesday, to fall to $96.52 by Thursday. This represents a drop of 15.6 per cent over those three days.
However, despite talk of a ceasefire, reports of clashes between the US and Iran in the Strait of Hormuz saw the price of a barrel of Brent crude rise back above $100 on the morning of Friday 8 May, trading at $101.40.
Stock markets are buoyant, the BIST 100 Index has hit a record high
Global markets are trending positively amid reports that the US is close to signing a one-page memorandum of understanding with the Iranian government to end the war with Iran and engage in more detailed nuclear negotiations. On Wall Street, the Dow Jones and S&P 500 indices hit new records.
The Istanbul Stock Exchange also set new records during the week. The BIST 100 index closed at a record high of 15,040 points on Thursday, 7 May. As of 7 May, the index had delivered a weekly return of 4.14 per cent, a monthly return of 16.40 per cent and a six-month return of 37.67 per cent.
Taxes accounted for 23% of communication expenditure
According to TELKODER’s 2025 Communication Expenditure Analysis report, the annual communication expenditure for a family of four comprising a landline, broadband internet and four mobile phone lines amounted to 27,556 TL. Service charges were calculated at 21,197 TL and mandatory taxes at 6,360 TL, with taxes accounting for 23% of the total expenditure.
According to the report, the annual communication expenditure for a family of four, which stood at 18,744 TL in 2024, rose to 27,556 TL in 2025.
İş Bankası’s net profit exceeded expectations
İş Bankası reported a net profit of 20.4 billion TL for the first quarter of 2026. The results, which exceeded analysts’ expectations, saw the market consensus predicting the bank would record a net profit of 17.7 billion TL.
Wave of redundancies in the tech sector: over 80,000 people left jobless
Mass layoffs in the technology sector gained momentum in the first three months of 2026. A total of 86 technology companies, including Meta, Microsoft and Google, parted ways with over 80,000 employees. According to a report in Evrensel Newspaper, company management cited AI investments and “increased efficiency” as the primary reasons for the sector-wide redundancies. In the US, AI was cited as the main reason for approximately a quarter of redundancies in March.