Turkey’s annual inflation rate stood at 10.68 percent in August, the Turkish Statistical Institute (TurkStat) announced Tuesday.
Consumer prices rose by 0.89 points, up from 9.79 percent in July, according to TurkStat.
Monthly inflation rose 0.52 percent in August over the previous month.
On Monday, Anadolu Agency’s Finance Desk survey of 14 economists predicted an average 0.15 percent increase in the monthly rate and an annual rate of 10.27 percent.
The economists forecast year-end inflation of 9.38 percent.
TurkStat’s report showed the highest monthly rise was in the education sector which saw a 2.79 percent increase in prices.
Transport prices rose 17.38 percent, making it the main driver of annual inflation.
Timothy Ash, a senior emerging-market strategist at London-based BlueBay Asset Management, said in a client note that the extent of the increase was disappointing although an uptick was expected.
“The assumption was that inflation would begin to ease back to year end, due to tax changes, but it will now be from a higher level,” Ash wrote.
Ash added that the figures left little scope for the Turkish Central Bank to ease its current hawkish monetary policy stance any time soon.
Ziraat Bank economist Bora Tamer Yilmaz told Anadolu Agency higher-than-expected inflation numbers were driven by strong euro and higher commodity prices.
“Some consumer products in the Turkish market originate from Europe and many products are being priced in euros. Durable goods inflation has a higher sensitivity towards euro volatility,” Yilmaz said.
Yilmaz also underlined the effect of the Eid al-Adha holiday on transport costs, especially air-fares, which increased significantly.
“Airfares have increased by 18.2 percent annually alongside with transportation group items,” Yilmaz said.
He said he expected the Turkish Central Bank to hold on to its tight stance until improvements are visible in inflation statistics.
Sakir Turan, an economist at Odeabank, told Anadolu Agency that new fixed-weight methodology in inflation calculations, along with price adjustments ahead of the Eid- al-Adha holiday, led to the rise in headline inflation in the month.
“Even though we think government’s recent measures to reduce the volatility in food prices may be effective in the medium-term,” Turan said.
Turan added that the rise in inflation rate would continue in forthcoming months due to foreign exchange rates and cost factors.
Source: Anadolu Agency