UPDATE - Turkey's annual inflation slips to 10.26 pct in Feb.

UPDATE WITH MORE DETAILS, COMMENTS FROM ECONOMISTS

By Tuba Sahin

ANKARA (AA) - Consumer prices in Turkey rose 10.26 percent in February, year-on-year, marking a slight decrease of 0.09 percentage points compared with figure from the previous month, according to the Turkish Statistical Institute (TurkStat) Monday.

The February figure was down from 10.35 percent in January.

The highest annual increase in February was seen in furnishing and household equipment, up 15.66 percent, and in transportation prices, up 13.19 percent.

On a monthly basis, consumer prices in February saw a change of 0.73 percent, standing above expectations.

According to a group of economists polled by Anadolu Agency last Thursday, Turkey's annual inflation rate had been expected to fall to 10.03 percent in February.

The median of estimates for February by 20 economists was a 0.52 percent rise compared with the previous month.

Data revealed that food and non-alcoholic beverages, and recreation and culture posted the highest monthly rise with 2.24 percent and 1.89 percent, respectively.

"In February 2018, [on a monthly basis] the index declined only for clothing and footwear among the main groups by 4.09 percent," TurkStat said.

Hilmi Yavas, an economist at Seker Invest, told Anadolu Agency that despite the horizontal course of the Turkish lira, an upward trend in core goods still continues.

"We do not see any significant signal that would make cumulative currency to slow down," Yavas said.

- Inflation rate projection

"All those developments indicate that we should be ready for negative surprises for core inflation rate in spring."

Muammer Komurcuoglu, an economist at IS Investment, said in a client note that monthly inflation rate, due to ongoing rise in food prices, surprised the market.

"Hence, annual inflation continued to linger around double digits in February," Komurcuoglu said.

He noted that ongoing higher inflation trend will weigh on expectations and pricing behavior.

"In this regard, we expect Central Bank to renew its rhetoric that tight monetary policy stance will be maintained due to inflation outlook," Komurcuoglu said.

He also projected the year-end inflation rate for 2018 to remain above 10 percent.

The February figure was at the lowest level during the last seven months. Last year, the highest annual rise in consumer prices was recorded in November with 12.98 percent, also the highest level since 2005.

In 2017, the lowest annual inflation was seen in January with 9.22 percent, while the minimum rise in consumer prices in 13 years from 2005 to 2017 was seen in March 2011, with 3.99 percent.

The Central Bank announced last month that it raised Turkey's year-end inflation forecast from 7 percent to 7.9 percent under a tight monetary policy stance.

The bank expects the inflation rate to fluctuate between 6.5 percent and 9.3 percent through to the end of 2018, and the figure would stabilize at around 5 percent in the medium term.