Sticky Inflation: The %30 Threshold Under Scrutiny

Turkey's battle against inflation forces a fresh look at the goal of staying below the %30 annual mark.

The Sticky Nature of Inflation: The %30 Barrier

■July CPI rise %1.78

■Seven‑month cumulative %19.86, annual %31.75

■Same period last year %33.52, this year a %1.77‑point improvement

Energy Price Volatility and Fuel Policy

■Crude oil averaged $60/barrel, spiked to $125, equilibrium projected at $90/barrel

■Fuel prices in July showed gasoline %3.8 and diesel %13.6 increases over the month average

VAT, Eşel Mobile and Market Dynamics

■Diesel VAT of 13.90 TL fully absorbed by Eşel Mobile, gasoline left with 4.30 TL, LPG with 10.96 TL

■Until VAT caps are reached, discounts do not flow to pumps; diesel 13.90 TL, gasoline 14.82 TL, LPG 11.38 TL

Forward Scenarios: The Two‑Decade Inflation Target

■2026 target set at %16, current forecast %26; staying under %30 is critical

■Maintaining an average below %1.6 for the next five months yields a total %8.5 rise – the lowest five‑month cumulative increase on record

■If Eşel Mobile is not extended, diesel could jump from 81 TL to 95 TL (%17 increase)

Analyst Note (Ufuk Tepe): The stickiness of inflation, compounded by energy price swings and VAT policy, amplifies cost pressures across the board, especially for the automotive sector. A potential %17 diesel price surge would reshape total cost of ownership for light‑vehicle fleets, dampening demand. In the short term, the central bank is likely to pursue aggressive rate hikes, but stabilizing oil prices and reforming VAT mechanisms will be decisive for achieving long‑term inflation targets.