Inflation Report - April 2025

In April, CPI inflation was 3.0% on a monthly basis, which was slightly below market expectations of 3.1%, despite an acceleration. Thus, annual CPI inflation fell to 37.86%, continuing its downward trend for the eleventh month. Monthly domestic PPI inflation was 2.76%, the highest level in the last three months. Annual domestic PPI inflation was 22.50% during this period, the lowest level since October 2020.

Monthly CPI inflation accelerated in April as a result of the recent severe agricultural frost, the TRY's depreciation in March, and increases in administered prices. Additionally, the decline in core indicators during this period indicated that the improvement in the underlying inflation trend had stopped. However, we anticipate that the underlying trend of monthly inflation will continue to improve in the months ahead, given that the effects of these developments are temporary. Nevertheless, the most significant risk that has the potential to put upward pressure on inflation through the pricing behavior channel is the deterioration in inflation expectations among households and the real sector. In this regard, the effects of the CBRT's additional tightening steps and macroprudential measures on inflation expectations and pricing behavior will have a significant impact on inflation's path.