The inflation rate was realized as 8.17 percent, below expectations, the Turkish Statistical Institute (TÜİK) announced on Monday. The consumer price index in December declined by 0.44 percent compared with the previous month.

According to Turkey's medium-term economic program announced by the government on Dec. 8, 2014, the end-of-year inflation rate was expected to be around 9.4 percent. The end-of-year inflation was also projected to be 6.3 percent in 2015, and it was stated that the government aims at 5 percent inflation in the consecutive years of 2016 and 2017.

On the other hand, the Central Bank of the Republic of Turkey (CBRT) had revised inflation predictions two times during the year, and predicted the end-year inflation to be 8.9 percent. Turkey's December inflation was forecast to increase 0.03 percent, according to a consumer price inflation survey made by the Turkish press agency AA.

The country's domestic producer price index also fell by 0.76 percent compared with the previous month, while recorded at 6.36 percent annually in 2014.

In early December, CBRT Governor Erdem Başçı said that high food prices in the country were delaying an improvement in the inflation outlook. Although food and non-alcoholic beverages inflation increased by 12.73 percent in December compared the same month last year, and the 12-month average was 12.62 percent, Turkey succeeded to see a decline in consumer prices.

The highest monthly increase was 0.79 percent in miscellaneous goods and services. In December 2014, the indices rose for hotels, cafes and restaurants by 0.51 percent, for housing 0.13 percent, for health 0.13 percent, and for furnishings and household equipment 0.12 percent.

The highest monthly decrease was observed at 3.71 percent in clothing and footwear. In December 2014, the indices declined for transportation, communications, alcoholic beverages and tobacco and recreation and culture by 1.78 percent, 0.11 percent, 0.01 percent, 0.01 percent, respectively.

The highest annual increase was 13.98 percent in hotels, cafes and restaurants. Food and non-alcoholic beverages increased by 12.73 percent, transportation by 9.77 percent, miscellaneous goods and services by 9.68 percent, health by 8.62 percent. Clothing and footwear were the other main groups where high annual increases were realized, increasing by 8.43 percent.

Now, the question is whether Turkey would continue the downward trend on inflation when the CBRT is convinced to decrease interest rates. The bank had left its benchmark interest rate at 8.25 percent, and kept the overnight borrowing rate at 7.5 percent in December for the fifth month in a row. The CBRT had been criticized by the government about its interest rates decision, which is seen as an obstacle against production.

Economist and Nişantaşı University President Dr. Kerem Alkin told Daily Sabah that if a 1.5 point decrease in inflation can be provided by March, the CBRT would implement a 1 point decrease on interest rates in its meeting in March at the latest.