January inflation figures for Turkey make annual target of 4 percent look unlikely

ISTANBUL (Reuters) – The Turkish central bank said yesterday January annual inflation dipped in all areas apart from unprocessed food prices but said an expected slowdown in service price inflation had not yet materialized. The January figures fueled doubts about prospects for the government meeting its ambitious year-end target of 4 percent. Last year, inflation came out at around double the official 5 percent target. «January inflation was characterized by the relatively high rise in unprocessed food prices due to supply factors… Together with this, the expected slowdown in service price inflation has still not materialized,» the statement said. Annual CPI inflation was 9.93 percent in January. An inflation shock last May and June sparked a sharp sell-off of Turkish assets which in turn fueled inflation and prompted the central bank to jack up interest rates.