By Selcuk Gokoluk

ANKARA, July 3 (Reuters) - Turkey's consumer prices rose 0.11 percent in June, higher than a forecast unchanged level, but still well within the comfort zone for the central bank to cut rates further to help Turkey's recession-stricken economy.

Turkish Statistics Institute figures on Friday showed the CPI index posted a year-on-year rise of 5.73 percent, and the producer price index rose 0.94 percent on the month, above a forecast rise of 0.14 pct, for an annual fall of 1.86 percent.

Turkey's official inflation target is 7.5 percent, but inflation is widely expected to end 2009 below that level due to weak domestic demand and lower commodity prices.

Central bank Deputy Governor Erdem Basci suggested this week the bank could cut rates further, his comments coming a day after official data showed Turkey's economy contracted by a record 13.8 percent in the first quarter.

Transport prices posted the biggest month-on-month spike at 2.82 percent, while food and non-alcoholic beverages' prices fell 1.56 percent.

Turkey's central bank has reduced interest rates by 800 basis points since November to its lowest ever 8.75 percent.

'The figures were not a big surprise and there is nothing to be concerned about with core inflation. I expect the central bank to carry out another rate cut after these figures,' said Guldem Atabay, chief economist at Ekspres Invest.

Chronic high-inflation was once the scourge of the Turkish economy, but consumer prices rose at their lowest annual rate in nearly 40 years in May, at 5.24 percent.

Turkey failed to meet inflation targets for three consecutive past years, but the central bank expects to undershoot its 7.5 percent target this year.

ING Bank economist Sengul Dagdeviren said of Friday's figure: 'I do not think it will change the general trend. I do not think it will have an impact on the position of the central bank. We are maintaining our expectation of a 50 basis point interest rate cut.'

The yield on the benchmark Feb. 2, 2011, bond moved towards two-month lows at 11.63 percent on expectations of another rate cut this month.

The bank's rate-setting Monetary Policy Committee will meet on July 16.

(Additional reporting by Daren Butler, editing by Mike Peacock/Toby Chopra) Keywords: TURKEY INFLATION/

(alexandra.hudson@reuters.com; +90 212 350 7062; Reuters Messaging: alexandra.hudson.reuters.com@reuters.net)

COPYRIGHT

Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.