Turkish inflation climbs more than expected to above 12%

ISTANBUL (Reuters) – TurkeyR;s consumer price inflation rose a bit more than expected to 12.15% year-on-year in January, official data showed on Monday, climbing for the third consecutive month after a dramatic drop last year.

A currency crisis in 2018 sent inflation surging to a 15-year high above 25%. But it has since declined and briefly touched single digits last year, allowing the central bank to cut interest rates sharply.

Turkey’s central bank has remained optimistic that inflation will drop toward 8.2% by year end, keeping the door open to a bit more policy easing.

The rise in January inflation was driven by alcohol and tobacco prices which surged 42.2% year-on-year, while heavily-weighted food and non-alcoholic drinks prices were up 9.04%, the Turkish Statistical Institute data showed.

A Reuters poll forecast annual inflation, which hit a low of 8.55% in October, would remain mostly flat at 11.86% in January.

The lira <TRYTOM=D3> traded flat after the release of the data, standing at 5.9845 against the dollar.

Month-on-month, consumer prices rose 1.35% in January, compared with a poll forecast of a 1.10% rise.

The producer price index rose 1.84% month-on-month in January for an annual rise of 8.84%, the data showed.

(Reporting by Daren Butler; Editing by Jonathan Spicer)