Turkey's annual inflation hits record high since 2008

Turkey's annual inflation rose to 11.29 percent in March, the highest since 2008, according to data unveiled by the Turkish Statistical Institute (TurkStat) on Monday.

The data also revealed that the consumer prices grew 1.02 percent over the previous month.

The highest annual increase was observed in alcoholic beverages and tobacco products (21.71 percent), followed by transportation (17.69 percent), health products (13.28 percent) and food and non-alcoholic beverages (12.53 percent), according to TurkStat.

Economists warned that a high and sticky inflation could undermine a stable and stronger long-run growth potential as well as the resilience of the economy.

The projections of the inflation for April and May stand at around 12 percent. From June onward, a softening but not a "smooth downtrend" is expected, according to Nilufer Sezgin, chief economist with IS Asset Management.

"We anticipate a volatile pattern, with high single digits or double digits prevailing until inflation drops to the vicinity of 9 percent by the very end of the year," she told Xinhua.

In her view, the acceleration in food inflation and a sharper depreciation in Turkish lira are the main culprits behind the high inflation.

"The tax cuts in furniture and white goods led to a slump in ticket prices of these categories, whereas in March these discounts were more than reversed by price hikes," the chief economist noted.

The upward adjustments in automotive and clothing prices are not seasonal, but reflecting a weaker currency at a later time, according to Sezgin.

"However, the annual services inflation was flat in March, suggesting that there is yet not much indication of a deterioration in pricing behavior and what we are observing is more a direct hit by currency," she said.

Sadi Uzunoglu, a professor of economy from Trakya University, said the increasing costs of Turkey's foreign-dependent production and the pursuit of profit by Turkish entrepreneurs are the main causes of a high inflation.

"The manufacturers raise the prices immediately as the forex goes up, but when it falls down they do not readjust their tariffs," Uzunoglu said. "Instead, they lift the prices once again as soon as the forex goes up for a second round."

Turkey's currency has been falling by three percent this year, marking a weakening of more than 25 percent since a failed military coup in July 2016.

Turkish lira has managed to rebound over the last few months after the Turkish Central Bank began a tightening policy at the start of this year.

The Turkish currency against U.S. dollar weakened slightly to 3.64 after the latest data was announced in the morning.

Turkey achieved a growth of 2.9 percent in 2016. Endit