Turkey: Inflation falls to a record low in January
February 3, 2011
In January, consumer prices rose 0.4% over the previous month. The increase, which contrasted a 0.3% drop in December, was below market expectations of a 0.5% rise as well as the 1.9% increase tallied in January 2010. As a result, annual inflation fell to 4.9% in January (December: +6.4%), which is the lowest inflation rate on record. The monthly result reflected higher prices for food and non-alcoholic beverages (+1.6% month-on-month) as well as higher transport costs (+1.4% mom), which were partially offset by a 7.8% drop in prices for clothing and footwear, due to winter sales. Meanwhile, the core inflation index, which excludes more volatile categories such as unprocessed food and energy, remained flat over the previous month, driving annual core inflation down from December's 5.3% to 3.9%. The Central Bank forecasts inflation to end 2011 at 5.4%, before declining to 5.1% in 2012. According to the Monetary Policy Report, the year-end inflation target for 2011 is 5.5%, while the goal for 2012 is set at 5.0%.