Analysts said the data showed the government's year-end target of 12 percent year-on-year inflation was within reach, but they did not expect the figures to prompt the central bank to cut short-term interest rates.
The consumer price index (CPI) rose 0.22 percent month-on-month in July and was up 9.57 percent from a year earlier, the State Statistics Institute said.
The July wholesale price index (WPI) fell 1.52 percent from a month earlier for a year-on-year rise of 9.44 percent.
According to the median forecast in a Reuters poll of 31 analysts, CPI was seen falling 0.1 percent in July, held in check by falling agriculture prices. WPI was forecast to rise 0.11 percent.
"These figures are in line with the 12 percent year-end target which we have set," Economy Minister Ali Babacan said in a statement released after the data.
"Though there may be occasional increases in annual inflation in the months ahead due to seasonal factors and international developments, reaching the annual CPI target of 12 percent seems possible," Babacan added.
The statistics office said agricultural prices fell 8.6 percent month-on-month. Manufacturing industry prices rose 1.1 percent from a month earlier, with private sector industry prices up 0.3 percent and state prices up 2.7 percent.
"Consumer prices came in higher than expected due to robust domestic demand in July but this is not threatening and lower-than-expected wholesale inflation is a positive signal for the coming months," Disbank economist Erkin Isik said.
Consumer prices in June fell 0.13 percent for a year-on-year increase of 8.93 percent, while WPI was down 1.05 percent for an annual rate of 10.53 percent.
Last year consumer prices in July fell 0.4 percent and were up 27.4 percent year-on-year. Wholesale prices were down 0.5 percent for a year-on-year rise of 25.6 percent.
"I don't see an interest rate cut because a roadmap with the International Monetary Fund is not clear yet, and oil prices remain high," Hakan Aklar from Ak Investment said.
Turkey has not yet said whether it will seek a new lending or a monitoring deal with the Fund when the current $19 billion deal expires in February 2005.
Also some analysts said Turkey was particularly vulnerable to high world crude prices given that its current account deficit lurched deeper into red this year.
The fall in agriculture prices will not continue into autumn, and Turkey may not then see inflation figures as low as the current ones, Aklar said.
"The central bank sees this, and cutting interest rates will mean that it is not bothered by strong demand and the boom in imports," he said. "The central bank will wait more before any rate cut due to these risks."