In Turkey, inflation isn’t a macroeconomic data point. It’s a line in your monthly management.
A foreign company setting up in Western Europe builds inflation into its annual budget, revises prices once or twice a year, and moves on.
In Turkey, that same reflex turns against it within months.
The numbers have improved. They remain high, and above all, volatile.
Turkey’s annual inflation eased to 32.1% in June 2026, continuing a downward trend that began after the 2022 peak. That’s a genuine improvement. But two months earlier, in the same year, inflation had accelerated again, driven by an energy cost spike tied to tensions around the Strait of Hormuz. Policy rates, meanwhile, stayed close to 40% for most of the past year.
What this trajectory tells foreign companies: Turkish disinflation is not linear. It can reverse within weeks, driven by external shocks that nothing in the standard playbook of a European subsidiary has prepared local teams to absorb.
A fixed annual budget is a decision to lose margin, not a simplification of management.
A local commercial contract denominated in Turkish lira, a salary scale revised once a year, a subsidiary budget locked in January for the full year: each of these choices, standard elsewhere, is an almost guaranteed source of margin erosion in Turkey. A company that applies its European budget cycle without adapting it discovers, by year-end, a gap between budget and actuals that no ordinary management control fully explains — because the cause isn’t operational, it’s monetary.
Currency risk has become a boardroom issue, not just a treasury one.
Between cycles of rate hikes and cuts, semi-annual revisions of multiple legal thresholds indexed to inflation, and the lira’s volatility against the euro and the dollar, a company that invoices, buys, or employs in Turkey carries a currency and indexation risk that far exceeds what a subsidiary treasury function can absorb alone. This needs to reach the group’s executive committee with the same frequency as commercial performance tracking.
Companies that succeed in Turkey don’t forecast inflation. They build management systems designed to live with its unpredictability.
That means quarterly, if not monthly, price reviews on sensitive contracts. Systematic indexation clauses in local commercial and subcontracting agreements. Margin reporting in the group’s reference currency, not just in lira, to catch erosion before it becomes irreversible.
At Bosphorus Transition Partners, we help finance and general management teams build this adapted governance, turning Turkish volatility from a risk absorbed into a variable managed.