Turkey's inflation increased for the second straight month in January and remained well above the central bank's target.
The consumer price index rose 7.48 percent year-on-year, after climbing 7.40 percent in December, data from the Turkstat showed on Monday. Economists had expected an inflation rate of 7.50 percent.
The Turkish central bank has an inflation target of 5 percent. In 2013, annual inflation remained above the target at 7.4 percent versus 6.2 percent in 2012.
Last week, the central bank raised rates aggressively to support a tumbling lira and high inflation. The one-week repo rate was more than doubled to 10 percent from 4.5 percent and the overnight lending rate was hiked to 12 percent from 7.75 percent.
The central bank blamed the depreciation of the Turkish lira and rising food prices as reasons for inflation exceeding the target significantly at the end of 2013. Governor Erdem Basci forecasts inflation to move towards the target gradually by the second half of the year and reach the 5 percent target by mid-2015.
This month, the bank raised its inflation forecast for this year to 6.6 percent from 5.3 percent. The bank has vowed to maintain a tight monetary policy stance until there is a significant improvement in the inflation outlook.
Month-on-month, consumer prices rose 1.72 percent in January, following a 0.46 percent gain in December.
Separately, the Turkstat reported that domestic producer price inflation accelerated to 10.72 percent in January from 6.97 percent in December. Domestic producer prices rose 3.32 percent on a monthly basis.
by RTT Staff Writer
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