Türkiye’s annual inflation reached its highest level in half a year in April, official data showed on Monday, in a rise that the government considers “temporary” and has been mainly driven by the pricing pressures from the fallout of the Iran war.

Consumer prices rose 32.37% last month from a year earlier, the Turkish Statistical Institute (TurkStat) said, up from 30.9% in March. That marks the highest measure since October 2025.

It’s the first read on inflation to capture the effects of the Iran war after both annual and monthly measures in March came below forecasts. Officials have said recent developments would impact but not change the disinflation trend.

On a monthly basis, prices rose 4.18%%, accelerating from 1.9% in March, driven mainly by increases in housing, water, electricity, gas and other fuels, the TurkStat data showed. Both annual and monthly readings exceeded forecasts.

The recent rise is temporary, and the disinflation process is expected to continue, Treasury and Finance Minister Mehmet Şimşek said on Monday.

Şimşek said energy and commodity prices have risen due to recent developments, creating short-term pressure on the inflation outlook, but added that the government is taking necessary steps to limit their impact.

Surveys had forecast monthly inflation at about 3.28% and the annual rate at around 31.25%, as the Iran war drives a sharp rise in energy prices.

The ⁠biggest monthly price rises in April came from the clothing and footwear sector, which saw 8.94% inflation, and the housing sector at 7.99%, while key food and drinks sector prices were up 3.7%, the data showed.

Transport sector prices jumped 4.29% in April.

Şimşek said inflation in services improved by 14.3 points compared to the same period last year, standing at 40.3% annually, while it was 16.5% in core goods.

The Iran war is dealing a huge shock to the global economy because Iran has blocked the Strait of Hormuz, the waterway through which around 20% of the world’s oil formerly passed on its way to customers from producers in the Persian Gulf.

The surge in energy prices poses a challenge for import-heavy economies like Türkiye.

“Although rising energy and commodity prices due to geopolitical developments exert pressure on the inflation outlook in the short term, we are taking the necessary steps within the framework of budget possibilities to limit these effects,” the minister wrote on the social media platform X.

Authorities have taken steps to limit the impact of the war through ​measures that include a fuel ​pricing mechanism, alongside measures ⁠to shield agricultural costs.

“We consider the rise in inflation to be temporary and foresee the continuation of disinflation. We will resolutely continue to implement our policies that will increase the welfare of our citizens by ensuring permanent price stability,” Şimşek wrote.

Türkiye’s inflation had peaked at 85% in October 2022 before easing to 64% by year-end and standing at around 65% in 2023. Disinflation began in 2024, bringing it down to 44%, followed by a further decline to 31% last year.

The TurkStat data also showed the domestic producer index rose 3.17% month-over-month in April for an annual increase of 28.59%.

In addition to refined petroleum products, food products, crude oil and natural gas, and chemicals were the major drivers of the April PPI increase, likely reflecting the impact of the U.S.-Iran war on some industrial materials and administrative pricing decisions, analysts at the Dutch financial giant ING said.

“Global commodity prices – particularly oil prices – in the current geopolitical backdrop will remain the key risk factors for the PPI trend in the near term,” they said.

The jump in energy costs due to the Middle East conflict and the resulting inflationary pressures have curbed central banks’ room to cut interest rates.

Central Bank of the Republic of Türkiye (CBRT) flagged rising inflation risks in its monetary policy committee statement last month, when it kept its benchmark policy rate steady, saying it was closely monitoring fallout from the Iran war and potential second-round effects.

Before the conflict began shifting expectations, the CBRT had been expected to continue a rate-cutting cycle that began in late 2024.

In February, the bank raised its year‑end inflation forecast range by two percentage points to 15%-21%, while keeping its interim 16% target unchanged.

It is due to present its second inflation report of the year next week. Analysts say it will likely feature a revision of both the target and forecasts.

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Exports of goods from Türkiye to European Union nations gathered pace in the first four months of the year, rising by over 6% to top $35 billion, according to a report on Monday.

Overall, Turkish exports rose by 3% on a yearly basis from January through April, reaching $88.6 billion, according to the data compiled from Türkiye Exporters Assembly (TIM).

Meanwhile, shipments to its top trading partner, the EU, were up 6.31% to hit $35.22 billion, the data revealed.

The automotive industry led exports to the EU, with nearly $10.3 billion. It was followed by chemicals and products with $4.6 billion, ready-to-wear and apparel with $3.17 billion, iron and non-iron metals with $2.68 billion, electrical and electronics with $2.61 billion, steel with $2.23 billion, and machinery and components with $1.34 billion.

The share of these sectors in total exports to EU countries was approximately 30.5%.

In the January-April period, Germany received the highest export volume among EU countries. Exports to Germany increased by 7.2% to reach $6.76 billion.

Europe’s largest economy was followed by Italy with $4.5 billion, Spain with $3.5 billion, France with $3.48 billion and Romania with $2.44 billion, respectively.

EU’s 5th largest trade partner

Istanbul Chamber of Commerce (ITO) President Şekib Avdagiç, in an assessment to Anadolu Agency (AA), stated that the EU stands as Türkiye’s largest trading partner, while Türkiye is the EU’s fifth largest trading partner.

Emphasizing that deepening the economic integration between Türkiye and the EU has become not only a commercial but also a geoeconomic necessity, Avdagiç pointed to a need for “stronger integration” of Türkiye into the European production ecosystem.

“In a period when global supply chains are being reshaped, stronger integration of Türkiye into the European production ecosystem will yield win-win outcomes for both parties,” he noted.

Avdagiç also stressed the importance of developing stronger collaborations between Türkiye and the EU in key areas such as green transformation, digitalization, and industrial transformation.

“Joint steps to be taken in these areas will not only boost competitiveness but also lay the foundation for sustainable growth,” he added.

Türkiye-EU trade partnership

Similarly, Avdagiç underlined the critical importance of the Türkiye-EU partnership from an economic perspective, describing Türkiye as a reliable production and supply center for Europe.

Avdagiç noted that the EU is the primary source for Türkiye’s imports of qualified technology, machinery, and capital goods, saying: “This reciprocal dependence shows that our relationship is built on a sustainable and strategic foundation. Türkiye not only sells goods to the EU but also directly contributes to Europe’s competitiveness through joint production chains.”

Referring to the importance of including Türkiye under the “EU-origin – Made in EU” coverage as part of the customs union, the ITO head suggested that “the first stage in the draft law was positive.”

“Now, challenging steps await us at the commission and parliament stages. If this basis is not confirmed, the Made in EU production networks may create a competitive disadvantage for Türkiye,” he said.

Avdagiç also emphasized that updating the customs union agreement is essential for Türkiye, echoing the earlier calls of the Turkish business community to agree on a deal that better fits current market and geopolitical conditions.

“At a time when the EU is signing free trade agreements with India and Mercosur, it is necessary for Türkiye to be subject to the EU regime in exports as it is in imports. This issue is even more important than visa liberalization.”

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The European Union’s trade and economy chief, Maros Sefcovic, is set to hold talks with his U.S. counterpart on Tuesday in Paris, an EU spokesperson said, following President Donald Trump’s latest tariffs threat last week.

Trump said Friday he will hike U.S levies on EU cars and trucks from this week, accusing the bloc of not complying with an earlier tariff agreement.

The EU dismissed the claim and insisted it remained committed to the deal.

“Since day one, we are implementing the joint statement, and we’re fully committed to delivering on our shared commitments,” EU spokesperson Thomas Regnier said.

Sefcovic will meet U.S. Trade Representative Jamieson Greer on the margins of a G-7 ministerial meeting in Paris on Tuesday, the spokesperson added, as he noted talks between the two sides continued at different levels.

The European Parliament has given its conditional approval to the EU-U.S. trade pact, but under EU procedures, before the deal is implemented by the bloc, a final version still needs to be negotiated with member states.

Regnier said the EU kept Washington “fully informed throughout the process” and sought to “reassure the other side of the Atlantic, work is ongoing. Progress is being made.”

While the EU has warned it is keeping its options open, Regnier refused to speculate on how the EU would act if the tariffs kick in.

“We will not escalate any threats. We focus on the implementation phase,” he said.

Retaliatory measures?

Separately, a German foreign trade group signalled on Monday support for retaliatory EU measures if new U.S. tariffs announced by Trump take effect.

“Possible countermeasures” could be discussed as soon as it is “clear” why exactly Trump is planning to impose new tariffs, to what extent and on what legal basis, BGA President Dirk Jandura told the Handelsblatt business newspaper.

While stressing that dialogue and negotiations were the means of choice, Jandura also said that it was key for Europe to “defend its interests clearly and consistently.”

The latest move by the U.S. president marks a sharp escalation after months of relative calm in the tariff dispute. In August, Trump and European Commission President Ursula von der Leyen agreed on a framework capping tariffs on most EU imports, including cars and car parts, at 15%.

In return, the EU pledged to scrap tariffs on U.S. industrial goods and improve market access for agricultural products such as pork and dairy.

However, implementation has slowed amid renewed tariff threats by Trump and legal uncertainty following a U.S. Supreme Court ruling in February that found many of his existing tariffs unlawful.

The European Parliament said in March that further implementation would be subject to strict conditions, with member states also required to approve the necessary regulations.

The president did not elaborate on how he believes the EU had failed to adhere to the terms of its deal.

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He had met his 6-year-old son only once. A few days close to each other in a life otherwise spent miles apart.

For 15 years, Mohammad Abdullah Al Mamun worked in Saudi Arabia, sending money home to his family in one of Bangladesh’s poorest areas. This year, he had planned to return, build a larger house with his savings, and spend time with the child he barely knew.

Then, on March 8, a missile struck his workers’ camp. He suffered severe burns and later died. He was among more than two dozen foreign workers killed across the Mideast after the U.S. and Israel went to war with Iran in February.

Tens of millions of foreign workers have helped build the Gulf Arab states’ modern, oil-fueled economies, with many not fully sharing in their prosperity.

Now they face an even sharper dilemma: Keep working in the Mideast, where wages are far higher, hoping that a shaky ceasefire endures; or return to already poor countries where prices have soared because of the conflict.

Mamun’s choice was made for him. He arrived home in a coffin earlier this month.

“We don’t know what we will do next,” said his widow, Sadia Islam Sarmin.

Migrant workers make up a majority of the population in many Gulf Arab states. Westerners, Arabs and Indians dominate business and finance, while laborers from poor countries in Asia and Africa toil for long hours in scorching temperatures at oil facilities and construction sites – often with few protections.

The Coalition for Labour Justice for Migrants in the Gulf, an advocacy group, says few had access to bomb shelters and many were stranded by the conflict. It says attacks killed at least 24 foreign workers in the Gulf and four in Israel as Iran and allied armed groups launched waves of missile and drone strikes. Their count includes eight mariners killed at sea.

“It’s a very precarious situation for migrant workers,” said Udaya Wagle, who studies labor and migration at Northern Arizona University.

A cease-fire was announced in early April, but negotiations to end the war have repeatedly stalled. Iran has effectively blocked the Strait of Hormuz, a key waterway for global oil and gas, and says it will only reopen it if the war ends and the U.S. lifts its blockade.

Remittances in question

The resulting spike in the price of gas, fertilizer and other goods has hit Asian countries particularly hard.

Remittances from the Gulf make up about 1% of India’s gross domestic product (GDP), 3% to 5% of the GDP in Bangladesh, Pakistan and Sri Lanka and nearly 10% in Nepal.

Now they are more vital than ever, as household incomes are strained and governments seek foreign currency to buy oil and gas.

The Gulf economies also face a bleak outlook, with exports bottled up and key energy facilities in need of repair after missile strikes. The fighting could resume, as Iran rejects U.S. President Donald Trump’s demands.

Mamun’s family awoke on March 9 to phone calls saying the 35-year-old had been hurt. Video footage shot by another worker showed him sitting in the open, badly burned and bleeding, crying out for help.

“He never imagined he would be hurt. That a missile would fall on him,” said Maruf Hasain, his younger brother.

Workers like Mamun are the most vulnerable since they do the “most dirty, dangerous and difficult” jobs, said Shariful Islam Hasan of the Bangladeshi development organization BRAC.

In Qatar, a 27-year-old Bangladeshi factory worker labored through 12-hour shifts as missiles flew overhead. Shrapnel from one strike fell near his living quarters. When alarms sounded, he said, workers went to a designated room.

He earns less than $400 monthly and sends two-thirds home. “We have no choice but to keep working,” he said on condition of anonymity for fear of angering the authorities.

Qatar enacted several reforms in the run-up to hosting the 2022 World Cup, including the partial dismantling of a system that tied workers to their employers. But activists say abuses are still widespread and that workers have few avenues to pursue justice.

Ahmed al-Aliyli, a taxi driver in Qatar, has not sent money home to his family in Egypt for two months. He once earned as much as $3,000 a month, but his income has plunged to a third of that as the war has disrupted travel. “We are the collateral damage of this war,” he said.

A slowdown in key sectors like real estate and construction will hit migrant workers directly, said Hasan of BRAC. Workers from Bangladesh and Pakistan are especially vulnerable, as they are often employed informally and without fixed contracts, he said.

Despite reforms in some countries, work permits are also often tied to a single employer and, in some cases, workers are effectively stranded, according to the labor coalition. It warned that some employers may use the conflict to withhold wages, deny leave, or carry out arbitrary dismissals.

When the war began, Mamun’s mother, Shahida Khatun, urged him to come home.

‘No words to describe the agony’

He had been saving up since November. In his last call home, he promised his younger brother and sisters he would pay for their studies, that he would build a larger house for his parents and return for good this spring.

Now, his family is struggling to recover his wages and piece together a life without him.

“The pain of losing a child. There are no words to describe the agony,” Kathun said.

For many workers, going home would mean giving up a steady income and much higher wages.

Marlene Flores, a Filipina worker in Qatar, said she felt the shudder each time a missile was intercepted. But the tax-free pay and health insurance made it feel safer – in a way – than the Philippines, which has declared a ″ national energy emergency.”

“It’s not easy for me to say,” she admitted, “But I would really stay here.”

Israel also has a large population of foreign workers. Filipino caregiver Jeremiah Supan continued caring for his two elderly charges despite near-daily missile alerts, sometimes dashing out for food or medicine despite the danger. He questions whether his own family could survive if he returned to the Philippines.

“I know that in the blink of an eye, one can die,” he said. “But what life shall we return to?”

Türkiye’s manufacturing sector shrank more sharply in April, as the war in Iran triggered higher prices, supply shortages and softer demand, a business survey showed on Monday.

The Istanbul Chamber of Industry (ISO) Türkiye Manufacturing PMI, compiled by S&P Global, fell to 45.7 in April from 47.9 in March.

The 50 mark separates growth from contraction.

Manufacturing production was cut to the joint-steepest extent since the COVID-19 pandemic, while the decline extended to 25 straight months.

Demand weakened further, the survey showed. Total new orders and export business both fell by much more than in March, while firms linked softer order inflows partly to mounting inflationary pressures.

Cost pressures intensified again, with input cost inflation quickening, the survey showed, with higher fuel and oil costs due to the impact of the war.

Firms cut employment, purchasing activity and inventories, with stocks of inputs falling and suppliers’ delivery times lengthening.

“April saw an intensification of the impact of the war in the Middle East on the Turkish manufacturing sector, with firms reporting muted demand, strengthening inflation and supply-chain disruption,” Andrew Harker, economics director at S&P Global Market Intelligence, said.

“Concerns around how long the effects of the conflict may persist mean that manufacturers are in a cautious mood, scaling back employment, purchasing and inventories accordingly.”

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Türkiye’s annual inflation rate edged up to 32.37% in April, quickening from 30.9% in March and exceeding economists’ expectations, official data showed on Monday.

Monthly, consumer prices climbed 4.18%, accelerating from 1.9% in March, driven mainly by increases in housing, water, electricity, gas and other fuels, according to the Turkish Statistical Institute (TurkStat).

In a Reuters poll, monthly inflation was forecast to be 3.28%, with the annual rate seen at 31.25%, as the Iran war drives a sharp rise in fuel prices and expectations of a slower-than-anticipated disinflation trend.

The biggest monthly price rises in April were shown by the clothing and footwear sector, with 8.94% inflation, and the housing sector at 7.99%, while key transport sector prices were up 4.29% and food and drinks sector prices were up 3.7%.

The data also showed the domestic producer index rose 3.17% month-on-month in April for an annual increase of 28.59%.

The central bank flagged rising inflation risks in its monetary policy committee statement last month, when it kept main interest rates steady, saying it was closely monitoring fallout from the Iran war and potential second-round effects.

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