Oil prices drive annual inflation back to double digits

Turkey's annual inflation rate stood at 10.68 percent in August, revisiting double digits, with price hikes in cars, oil and LPG becoming the driving force, according to figures by the Turkish Statistical Institute (TÜİK) released on Sept. 5. 

Consumer prices rose by 0.89 points, up from 9.79 percent in July, according to TÜİK.      
  
Transport prices rose 17.38 percent, making it the main driver of annual inflation. This contributed 0.34 points to annual inflation alone. 

A disease in eggs in Europe boosted demand from Turkey, triggering a 16.85 percent increase in the local price of the commodity and making it the champion of annual inflation in August. 

The prices of milk and dairy products also increased, however, the overall increase in food prices was moderate. 

Monthly inflation rose 0.52 percent in August since the previous month, above the expectations. 

On Monday, state-run 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 a year-end inflation of 9.38 percent.        

TÜİK's report showed the highest monthly rise was in the education sector, which saw a 2.79 percent increase in prices.        

Timothy Ash, a senior emerging-market strategist at the 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...