The Price of War: Central Bank of Turkey Hikes Inflation Forecast to 26% as Middle East Energy Crisis Deepens

The Central Bank of the Republic of Turkey (CBRT) announced on Thursday, May 14, 2026, a significant upward revision of its annual inflation forecasts, citing the severe impact of the ongoing conflict in the Middle East on global energy prices. Governor Fatih Karahan, during the presentation of the quarterly inflation report in Istanbul, revealed that the year-end inflation expectation has been surged from 16% to 26%, primarily driven by the escalating energy costs linked to the war in Iran.

The "Iran Impact" on Global Supply Chains Governor Karahan directly linked the inflationary pressures to the U.S. and Israeli military strikes on Iran that commenced on February 28. These geopolitical disruptions have triggered a sharp rise in energy prices, consequently inflating transportation and logistics costs within Turkey. Although Turkey’s official annual inflation stood at 32.37% in April, the central bank has had to recalibrate its long-term targets. The new targets are set at 24% for late 2026 and 15% for 2027, with the ultimate goal of reaching 9% by the end of 2028.

Official Data vs. Independent Estimates Despite the Central Bank’s unwavering determination to pull inflation back below the 10% mark, independent economists from the Inflation Research Group (ENAG) remain skeptical of the official figures. ENAG estimates that the actual annual consumer price increase in April reached a staggering 55.38%, nearly double the government's data. As Turkey navigates this economic storm, the immediate future remains precarious, with the "short-term" inflationary effects of the Iranian conflict expected to persist, keeping Turkey’s double-digit inflation cycle alive for the foreseeable future.