I would like to elaborate on these factors to enable a better understanding of the forecasts. The October Inflation Report envisaged food inflation to be 10.5 percent at end-2010, to fall gradually to 7 percent at end-2011 and to remain at these levels throughout the forecast horizon. As I stated at the beginning of my speech, the sharp decline in unprocessed food inflation during the fourth quarter resulted in lower-than-expected food inflation. However, the potential impact of the recent upsurge in agricultural commodity prices on processed food prices led to an upward revision in the assumption for food inflation from 7 percent to 7.5 percent, which had around basis points upside impact on 2011 inflation forecasts (Table 2). BIS central bankers’ speeches  11  In the October Inflation Report, oil prices were assumed to be USD 85 per barrel for 2011 and USD 90 per barrel for 2012 and beyond. Moreover, import prices were assumed to rise gradually over the forecast horizon, increasing by an average percent year-on-year in 2011. Commodity prices have accelerated further since the release of the October Inflation Report due to the ongoing quantitative easing in advanced economies and the strong growth in emerging economies. In this context, in view of the commodity futures prices for the first half of January, we raised our oil price assumption to USD 95 per barrel for 2011 and thereafter (Table 2). Furthermore, again considering the commodity futures prices, we assume that import prices will increase by about 10.9 percent in 2011 (Figure 23).
Durmuş Yılmaz: Recent economic and financial developments in Turkey Speech by Mr Durmuş Yılmaz, Governor of the Central Bank of the Republic of Turkey, at the press conference for the presentation of the Inflation Report, Ankara, 25 January 2011. *  *  *  Distinguished Guests and Members of the Press, Welcome to the press conference held to convey the main messages of the January 2011 Inflation Report. The report typically summarizes the economic framework addressed in monetary policy decisions, elaborates global and domestic macroeconomic developments and presents the medium-term inflation forecasts, which have been revised in view of previous quarter developments, along with the monetary policy stance. The report contains eight boxes written in the light of completed and continuing research projects conducted under the aegis of the Central Bank. These boxes include detailed analyses on issues affecting our policies. Considering the extraordinary significance of developments in the global economy for our policies, one of the boxes where the developments in the euro area and the USA are analyzed explains the sensitivities of the peripheral economies of the euro area against the debt crisis. On the other hand, in the second box the reasons for the increase in long-term nominal bond yields in the USA following the second round of quantitative easing is discussed. Besides, two more boxes were prepared aiming to elucidate domestic inflation dynamics. While the first of these examines the reasons for volatility in unprocessed food prices, the second box offers an assessment of Core inflation indicators.