Turkey plans to slightly raise taxes in 2026 in order to try to control inflation by reducing fuel prices.

The Turkish government is planning to introduce minor taxes on key goods and services (including vehicle fuels) in 2026 as the latest measure to help the central bank curb inflation. According to media reports, informed sources who declined to be named revealed that Turkish government officials expect to control the increase in fuel-related taxes and regulated prices at a level consistent with the central bank's inflation target for next year, aiming to help the central bank achieve its inflation target of 16% by the end of the next year. The Turkish Ministry of Finance and Treasury did not immediately respond to requests for comments. Sources said that the semi-annual tax measures, which are typically formally announced in the first week of each year, will show that the tax increases on gasoline and diesel will be lower than the levels specified by law, meaning the increase will be more moderate. This move highlights the commitment of President Erdogan's government to help the Turkish Central Bank achieve its annual inflation target of reducing inflation from over 31% last month to 16% by the end of 2026. As consumer inflation in Turkey continues to rise, fuel costs are closely monitored by the foreign exchange market. Special consumption taxes on gasoline and diesel are typically raised twice a year, with the increase corresponding to the cumulative producer price inflation over the previous six months. The increase at the beginning of 2025 was also slightly lower than the level implied by the calculation formula, as Turkish authorities attempted to restrain price pressures. The new measures for the coming year will also target so-called "regulated prices," which include all goods and services directly set or influenced by the government and regulatory agencies. This category includes tobacco, alcoholic beverages, and energy. Turkish Minister of Finance and Treasury Mehmet Simsek said last month that the increases in some taxes will be based on the target inflation rate, rather than the 25.5% revaluation rate the latter being an indicator aligned with producer price inflation trends. According to Turkish economists, consumer price increases in the country are expected to reach about 30% by the end of the year, six percentage points higher than the central bank's year-end target for 2025 of 24%. Analysts expect this figure will slow to slightly above 25% in the next 12 months, according to institutional forecasts. It is worth noting that, as of December 2025, the Turkish central bank is not in a process of raising interest rates, but has already entered a process of rate cuts/monetary easing: for example, on December 11, 2025, the central bank reduced its one-week repo policy rate from 39.5% to 38%, clearly placing it in the context of "disinflation". The reason for Turkey's persistently high inflation (around 31.1% year-on-year in November 2025) is mainly due to the impact of the significant depreciation of the lira in the past few years on import and energy/food costs, as well as the combined effects of inflation expectations, pricing behavior stickiness (indexing/price hike mechanisms including wages), and adjustments in tax/regulated prices. The deeper-rooted "aftermath" stems from a period when rate cuts and credit expansion were still promoted in a high inflation environment, leading to a currency and inflation spiral (with inflation exceeding 85% in 2022 and accompanying a currency crisis), which is also the typical result of what the market calls "Erdoganomics".