The consumer price index rose 1.65 percent month-on-month in January, above a Reuters poll forecast of 1.14 percent, for year-on-year inflation of 7.31 percent, the data from the Turkish statistics institute showed.
The lira stood at 1.7487 against the dollar by 0823 GMT, slightly firming from 1.7494 late on Friday. The yield on the two-year benchmark bond inched down to 5.81 percent from 5.84 percent earlier.
Central Bank Governor Erdem Basci warned last week that there would be a limited rise in January inflation due to tobacco price adjustments. But analysts said food prices also contributed to the increase.
"We think the central bank will not give a policy reaction also because of the higher than expected PPI, which was due to higher food prices," said Asli Cakiroglu, an economist at HSBC.
The producer price index fell 0.18 percent on the month, for an annual rise of 1.88 percent.
"Inflation is expected to resume its downward trend after a limited rise in January due to tobacco price adjustments," Basci said in the bank's quarterly inflation report last week.
The report forecast that base effects in energy prices meant inflation may rise temporarily in May and June but that it would continue to decline in the following months, ending the year at 5.3 percent.
Annual consumer price inflation was 6.16 percent year-on-year in 2012, down from 10.45 percent the previous year.
The central bank cut both ends of its rate corridor and raised reserve requirements on Jan. 22 in a bid to control rapid loan growth and prevent excessive lira appreciation as hopes of a second investment grade rating mount.
It reduced its overnight borrowing rate to 4.75 percent from 5 percent and its lending rate to 8.75 percent from 9 percent.
The central bank will hold its next policy meeting on Feb. 19.
Source: Reuters
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