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Not what the Turkish central bank needed.

Turkey’s annual inflation rate climbed by far more than expected in January as the country’s central bank battles with a tumbling lira and the worst pace of economic growth since the financial crisis.

Annual inflation hit 9.2 per cent last month from December’s 8.53 per cent – far above policymakers’ range of 5 per cent – and a forecasted climb to just of 8.6 per cent. It is the highest inflation rate in a year.

The surge in consumer prices comes after a record-breaking slide for the lira, which has lurched to fresh lows against the dollar at the start of the year, losing more than 6 per cent of its value already in 2017.

In the face of growing pressure to halt the currency’s slide, Turkey’s central bank kept its benchmark interest rate unchanged last month but hiked its overnight lending rate by 75 basis points.

Explaining its latest policy decision, the central bank said it stood ready to tighten the lending rate again should inflation continue to surge above target.

But in worrying signs that the battle with rising prices is being lost, producer price inflation – which measures costs faced by manufacturers – hit 13.7 per cent.

The lira weakened on the news to slip 0.3 per cent against the dollar at TRY3.7475.

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