Published On 7/3/2026
Annual inflation slowed in Turkey last June for the first time since the outbreak of the Iran war, with the impact of the energy shock that pressured an economy largely dependent on oil and gas imports receding.
Turkish Statistical Institute data showed that the consumer price index rose 32.11% on an annual basis in June, compared to 32.61% in May, while monthly inflation slowed to 0.99%, after a monthly rise of 1.71% in May.
The June reading came after it ended two consecutive months of accelerating inflation, as Türkiye was affected by rising energy costs following the effective closure of the Strait of Hormuz during the war.
Energy pressure
The International Energy Agency notes that Türkiye’s dependence on natural gas has risen in parallel with the increase in oil and gas imports, leaving the economy more exposed to fluctuations in global energy prices.
The US Energy Information Administration also reports that Turkey imports almost all of its oil and petroleum liquids needs, as domestic production covered less than 9% of demand in 2022, and it has historically relied on natural gas imports to meet domestic consumption.
In its second inflation report for 2026, the Turkish Central Bank linked the war in the region to the rise in energy and transportation prices, saying that the potential closure of the Strait of Hormuz represents a threat to global energy supplies, and that oil and natural gas prices remained much higher than pre-war levels despite some decline.
Central Bank Governor Fatih Kara Khan said, in presenting the inflation report in May, that the Middle East tensions that began at the end of February 2026 caused negative supply shocks that became a major factor in the recent inflation path, noting that annual energy inflation rose 19 percentage points to 47% within two months due to oil and natural gas prices.
Between caution and pressure
The slowdown in inflation comes at a time when monetary policy makers are facing pressure from companies and banks to ease monetary tightening, after keeping interest rates at high levels for a long period while the path of reducing inflation slowed.
At its last Monetary Policy Committee meeting on June 11, the Turkish Central Bank kept the one-week repo rate at 37%, the overnight lending rate at 40% and the overnight borrowing rate at 35.5%.
The bank said the underlying trend in inflation, which rose in April partly due to energy prices, fell slightly in May, but noted that energy prices remained volatile and high amid geopolitical developments.
In May, the Central Bank raised its inflation forecast by the end of 2026 to 26%, compared to 15% at the end of 2027 and 9% at the end of 2028, stressing that the tight monetary stance will continue until price stability is achieved.
