May Inflation Preview: What Economists Are Forecasting — And What It Means for Your Shopping Cart

Before you head to the market this weekend, know this: economists are projecting May inflation figures that will directly shape what you pay for bread, electricity, and rent over the coming months. The gap between official forecasts and what families actually feel at checkout has never been more politically charged in Turkey. With the Central Bank's rate path hanging in the balance, this single data release could reprice everything from your mortgage rate to the interest on your savings account. Getting ahead of this number is not an academic exercise — it is a survival skill for anyone managing a household budget or a portfolio.

Economist consensus for May 2025 CPI is converging around 35–38% on an annual basis, a meaningful step down from the 68.5% peak recorded in early 2024 but still devastating in real purchasing power terms. The base effect is doing heavy lifting here: May 2024 was already a high-inflation month, so the year-on-year comparison flatters the current figure. Do not let the falling headline fool you — month-on-month pressures in food, services, and energy remain stubbornly elevated.

Food and non-alcoholic beverages, which alone account for roughly 24% of the Turkish CPI basket, are expected to show continued pressure driven by seasonal vegetable price spikes, persistent input cost inflation from agricultural chemicals and fuel, and the lagged effect of the lira's depreciation earlier in the year. A family of four spending 15,000 TL monthly on groceries in May 2024 is likely spending closer to 19,000–20,500 TL today, even as the headline rate 'improves.' That is the reality the number does not fully capture.

Services inflation is the category that should worry the Central Bank most. Rent, restaurant meals, and personal services are running well above headline CPI — some private surveys put services inflation north of 65% annually. This is the sticky, demand-driven component that does not respond quickly to monetary tightening and signals that inflation expectations among businesses and landlords remain unanchored. Until services inflation breaks, any talk of victory over inflation is premature.

The Central Bank of the Republic of Turkey (TCMB) has held its policy rate at 46% since March 2025, signaling a cautious wait-and-see stance. A May CPI print at the lower end of forecasts (closer to 35%) could give the MPC room to begin a modest rate-cut cycle as early as June or July — which would be bullish for BIST equities and TLREF-linked instruments but would risk re-igniting inflation if cuts come too soon. A print above 38% likely locks the current rate in place through summer, squeezing credit-dependent small businesses another quarter.

For the ordinary Turk renewing a lease, negotiating a salary, or deciding whether to keep savings in TL deposits or dollarize — this number sets the battlefield. Banks are currently offering TL time deposit rates between 40–43%. If May CPI lands at 36%, real returns briefly turn positive for the first time in years, potentially reversing deposit dollarization. That is a fragile but historically significant threshold that could attract TL inflows and momentarily strengthen the currency.

Turkey / EM Perspective

BIST 100 investors should watch the CPI release date (likely June 3–4) as a binary catalyst: a sub-36% print is bullish for rate-sensitive sectors — banking (GARAN, AKBNK, YKBNK), REITs (ISGYO, EKGYO), and consumer discretionary. A surprise above 39% would rotate flows toward inflation-hedge plays: gold miners (KOZAL, KOZA), energy distributors, and exporters benefiting from a weaker lira. TL bond holders in short-duration GOPs should book gains ahead of the announcement — the risk-reward is asymmetric. Small business owners with floating-rate commercial credit should use any post-announcement rate optimism to lock in fixed-rate refinancing before the window closes.

Near-Term Outlook

1. TUIK May CPI official release (expected June 3–4): The hard number that moves markets — watch month-on-month services sub-index specifically, not just headline. 2. TCMB June MPC Meeting (June 19): Will the committee interpret the May print as sufficient cover to begin easing? Wording around 'underlying trend' is the key signal. 3. USD/TRY daily close: If the lira holds below 38.50 post-CPI, it confirms markets priced in the disinflation; a break above 39.50 signals skepticism. 4. 2-year benchmark TL government bond yield: A rally below 38% yield would confirm bond market belief in the disinflation story and green-light equity rotation.

This content does not constitute investment advice.

Kaynak: Google News Ekonomi