Inflation figures for January are higher than expected, tempering the bull-run on the Istanbul Stock Exchange and underlining the need for the government to push through structural economic reforms.

Wholesale prices rose 5.6 per cent month-on-month in January, while consumer prices increased by 5.9 per cent. In December, the two indicators rose by 3.4 per cent and 3.9 per cent respectively. The January data compares to market predictions of rises in the 4.0-5.3 per cent range. The inflation figures, added to political uncertainties and the approach of the Eid holiday, combined to drive down the Istanbul stock market index by nearly 7 per cent on 4 February.

‘With the IMF or without the IMF, the Turkish authorities should at least address…inflation,’ central bank governor Gazi Ercel told Reuters on 4 February. Ercel has said that the annual rate of inflation will reach 70 per cent in the first six months of this year. It is currently running at just under 80 per cent.

A Turkish delegation visited Washington in January to discuss the government’s medium-term economic stabilisation programme with the IMF, the World Bank and the US government. The IMF, whose officials will visit Turkey for consultations next March, says it has not received a request from the Turkish government for support for the programme.