Turkey's inflation rate stood at 1.02 percent in January, whereas annual inflation rate decreased to 10.35 percent, according to the statement of the Turkish Statistical Institute (TurkStat) released Monday.

Annual inflation rate was 11.92 percent in December 2017 and 9.22 percent in January 2017.

The consumer price index (CPI) increased by 11.23 percent on the 12-month moving average basis.

On Friday, Anadolu Agency's Finance Desk survey of 17 economists predicted an annual inflation of 10.72 percent for January and an average 1.36 percent monthly increase in consumer prices.

The economists expected year-end inflation of 9.49 percent -- with the highest forecast at 8.70 percent and the lowest at 12.10 percent.

The highest monthly increase was noted in the miscellaneous goods and services category at 2.96 percent, followed by furnishing and household equipment at 2.44 percent, health at 2.42 percent, housing at 2.34 percent and food and non-alcoholic beverages at 1.67 percent.

The highest monthly decrease was in the clothing and footwear category at 6.02 percent, with communication being the other group with a decrease at 0.99 percent.

The highest annual increase was in the transportation category with 16.02 percent, followed by furnishing and household equipment with 13.49 percent, clothing and footwear with 12.63 percent, hotels, cafes and restaurants with 11.42 percent and miscellaneous goods and services with 11.38 percent.

Within average prices of 407 items included in the index, prices of 19 items remained unchanged while average prices of 295 items increased and average prices of 93 items decreased.

Erol Gürcan, investment advisory manager at Gedik Investment, said the data from January is potentially positive for short and mid-term inflation and economic outlook, while the positive base effect was the main reason of the sharp decrease in the CPI, year-on-year.

"On the other hand, the core CPI indicators remained at high levels between 12.2 and 12.3 percent," Gürcan said.

Turkish lira assets support

"These conditions limited the positive effects of the data, so the market's first reaction to the data was neutral.

"But, flattening of the core indicators after the deterioration in recent months is a positive signal for the short and mid-term inflation."

He added the limited improvement of the CPI could continue for a few months and a high, single-digit CPI level still could be possible in the first half of 2018.

"We expect the CPI will be mostly at low double-digit levels until the fourth quarter of 2018, then it started to fit the single digit levels," he added.

Keeping estimation of the CPI to stand between 8.8 and 9.2 percent at the end of 2018, Gürcan said we believe Turkish lira assets will be supported in short and mid-term if the Central Bank keeps its tight stance in monetary policy, independent of base effects and temporary factors like it said it would earlier.

The January figure was at the lowest level during the last six months. Last year, the highest annual rise in consumer prices was recorded in November with 12.98 percent, also the highest level since 2005.

In 2017, the lowest annual inflation was seen in January with 9.22 percent, while the minimum rise in consumer prices in 13 years from 2005 to 2017 was seen in March 2011, with 3.99 percent.

The Central Bank announced last month that it raised Turkey's year-end inflation forecast from 7 percent to 7.9 percent under a tight monetary policy stance.

The Central Bank expects the inflation rate would fluctuate between 6.5 percent and 9.3 percent through to the end of 2018, and the figure would stabilize at around 5 percent in the medium term.

As noted in the country's medium-term program introduced last September, inflation is targeted to converge to 5 percent through the end of 2020 by maintaining anti-inflationary monetary policy and fiscal discipline, "with the purpose of achieving high growth rates in the future, and increasing quality of growth".

Turkey's economy expanded 5.3 percent in the first quarter and 5.4 percent in the second quarter of 2017. In the third quarter, Turkey's economy became the fastest-growing among G20 countries, showing double-digit (11.1 percent) growth performance.