Turkey’s annual consumer price inflation came in flat at 10.26% in February compared to 10.23% in March. That very slight improvement marked the lowest level recorded since July last year but it meant inflation remained in double digits for the eighth consecutive month, figures from national statistics office TUIK showed on April 3.

Turkey’s inflation jumped into the double digits in February 2017. Since then the rate has only once moved back into the single digits, with that occurrence recorded in July last year. The peak point was November’s 12.98%. Since then there has been a slow descent to the latest figure of 10.23%.

“Fairly disappointing in that headline [inflation] is proving sticky—dropping only 2bps in YOY terms from last month to 10.23%”, Tim Ash, an analyst at Bluebay Asset Management, said in an e-mailed comment. “Single digit inflation seems elusive.”

Ash added: “More encouraging is that core inflation dropped 50bps to 11.44%, but note also the rise in the PPI [producer price index] to 14.28% from 13.71% last month.”

The government, said Ash, appeared to be promising measures to address sticky inflation this week, “albeit these seem likely to be administrative, and perhaps even extending to some tax cuts—but with [President Recep Tayyip] Erdogan holding rallies at the weekend and making a big thing about the need to cut interest rates, the CBRT [Central Bank of the Republic of Turkey] is now in a pretty difficult position. It needs to tighten, but how?” 

Volatile food prices rose by 2.03% m/m in March, bringing annual food inflation from 10.27% in February to 10.37%.

The annual rise in the C-index, one of the central bank’s favourite core inflation indicators, slowed further from 11.94% in February to 11.44% in March.

The C-index touched 12.30% in December, the highest level posted since January 2004 when the index was first compiled.

TUIK also reported on April 2 that the annual PPI had moved up to the highest level since December’s 15.47%, hitting 14.28% after recording 13.71% in February. The annual domestic PPI fell to 12.14% in January, the lowest level since December 2016, after hitting 17.30% last November, the highest level since July 2008.

Turkey’s central bank raised its end-2018 consumer price inflation forecast to 7.9% in January from the previous estimate of 7%. Its official inflation target for 2018 still stands at 5%.

President Erdogan is maintaining his aggressive rhetoric against any moves to put up interest rates, using an unorthodox theory to claim that high inflation is actually a result of high interest rates.

Moody’s expects Turkey’s inflation rate will rise to 12.2% at end-2018 from 11.9% at end-2017.