UPDATE - Turkey's annual inflation rate goes up in December

UPDATES WITH QUOTES FROM ECONOMISTS BURAK KANLI AND ENVER ERKAN

By Fatih Erkan Dogan

ANKARA (AA) - Turkey's inflation rate has gone up in December, according to a report from the Turkish Statistical Institute on Tuesday.

The annual rate of inflation rose to 8.53 percent in December from 7 percent in November, it said.

The highest monthly increase was 7.33 percent in alcoholic beverages and tobacco, it added.

Burak Kanli, an economist from Finansinvest, said: “The increase in consumer prices was mainly driven by increases in expenses linked to transport vehicles, and tobacco, alcoholic beverages and food prices’ inflation due to bad weather conditions.

“Seeing consumer price inflation at around 8 percent is a high probability in 2017.”

Economist Enver Erkan from KapitalFX also said consolidation of consumer prices inflation within the 8.5-10 percent band during the first months of 2017 was likely.

“There will be questions whether the Central Bank will change rates in its monetary policy meeting due on Jan. 24. The Central Bank opted to wait in December after rising rates in November,” Erkan said.

He also said the inflation was going up to 8.53 percent in conditions when the policy rate of Central Bank stands at 8 percent, pushing the real interest rate to minus 0.49 percent. “So in this sense, the economy is still fragile. Also, there may be market fluctuation in the short term.”

Erkan also noted the delayed effects of lira’s depreciation in consumer prices and the weak domestic demand was limiting inflation in recent months but now they had started to reflect in figures.