Turkey’s year-end inflation would probably have been around 20 percent without the US and Israeli war with Iran, but the conflict’s effect on energy and commodity prices has added at least 5 percentage points to the outlook, Treasury and Finance Minister Mehmet Şimşek said on Monday.
Speaking on CNN’s Turkish franchise CNN Türk, Şimşek said the conflict had disrupted energy and raw material supplies, weakened global growth and tightened financial conditions.
He said energy-importing countries such as Turkey had also faced pressure on their foreign trade balances because of higher oil prices.
“This shock lasted much longer than expected,” Şimşek said. “The amount of global oil production and shipments affected by the current shock is larger than in previous shocks, so we take it seriously.”
The war began with joint US and Israeli attacks on Iran on February 28 and has disrupted shipments through the Strait of Hormuz, a route used for a large share of global oil and gas trade.
Brent crude, the international oil benchmark, closed at $72.48 a barrel on the final trading day before the attacks and reached about $118 during the conflict.
Şimşek said the direct and indirect effects of the war, based on oil prices expected by markets for the whole year, had added at least 5 percentage points to Turkey’s inflation outlook.
“If inflation was initially going to be 21 percent, it is now rising to 26 percent,” he said.
The Turkish Central Bank in May raised the midpoint of its year-end inflation forecast to 26 percent from 18 percent, citing higher energy prices and geopolitical developments.
The bank also raised its interim inflation target for the end of 2026 to 24 percent from 16 percent.
Consumer prices rose 1.71 percent in May and 32.61 percent from a year earlier, according to official data released by the Turkish Statistical Institute on Friday.
The annual rate rose from 32.37 percent in April, while a Reuters poll of economists put the median year-end inflation estimate at 29 percent.
Turkey has struggled with high inflation since President Recep Tayyip Erdoğan pressed the central bank to cut interest rates despite rising prices beginning in 2021.
Şimşek returned to the government after Erdoğan’s re-election in 2023 and introduced a program based on higher interest rates, limits on credit growth and efforts to rebuild the central bank’s reserves.
Şimşek said the government was not using the conflict to excuse Turkey’s failure to meet its previous inflation projections.
“I am not looking for excuses,” he said.
“It would not have been possible to predict and price these shocks into the program,” Şimşek added, describing the conflict as a major but manageable shock.
He said domestic structural problems also contributed to inflation and acknowledged that external developments could not explain all deviations from government targets.
Şimşek said the government had built financial buffers by accumulating reserves before the conflict.
“We built the buffers, so to speak,” he said. “We accumulated reserves.”
Şimşek said the central bank currently had about $160 billion in reserves and described the amount as adequate despite the pressure caused by the conflict.
The figure refers to gross reserves, which include foreign currency and gold, and does not represent funds immediately available without liabilities.
Turkey’s gross reserves had risen to a record $218.2 billion at the end of January but fell after the start of the Iran conflict, as the central bank sold foreign currency and gold to support the lira and manage market volatility.