Turkey's Tax Hikes and Inflation Plans

ISTANBUL (Reuters) – Turkey's tax hikes for fuel and tobacco next year will be set in a way that will not endanger the country's 2025 inflation plans, Treasury and Finance Minister Mehmet Simsek said.

Turkish annual inflation stood at 47.1% in November, higher than expected but at its lowest level since mid-2023. A Reuters poll forecast that it will fall to 26.5% by end-2025, higher than a central bank prediction of 21%.

Taxes on fuel and tobacco are increased each year based on the producer price index and have a major impact on inflation.

Simsek told reporters in Sanliurfa on Sunday that the government was determined to sustain the recent decline in inflation.

He also said that the country's foreign currency-protected deposit scheme, known as KKM, will be terminated without creating any volatility in the markets. The central bank previously announced that it would end in 2025.