The course of events in the direction of double-digit inflation

While the average January increases in consumer prices is around 1 percent, the increase this January reached 1.82 percent, which was quite a surprise. When the monthly rate reached 1.82 percent, then the annual inflation, which stood at 8.81 percent in December 2015, jumped to 9.58 percent at the end of January. This situation, all of a sudden, brought up the question of whether or not the yearly inflation would reach double-digits, in other words 10 percent. 

The inflation target was 6.5 initially and then it was revised to 7.5 percent. However, this course of events point to a very possible double-digit number.

Target and realization 

Turkey always remains behind the inflation target that is set by the Central Bank at the beginning of the year. During the 14-year period from 2002 to 2015, the number of targets reached was three, while real inflation occurred above the targeted number in 11 of those year years. This happened also in 2015. The Central Bank's Consumer Price Index (TÜFE) target of 5 percent did not happen, and inflation went up to 8.8 percent. 

The same situation was also true for the Producer Price Index (ÜFE). In 2015, the domestic producer's price Index (Y?-ÜFE), which is the average increase in the prices of products produced by industrialists, was 5.7 percent according to the Turkish Statistics Institute (TÜ?K). This is slightly behind the 6.4 percent increase in 2014 and almost two points below the increase in the period from 2008 to 2013, when the foreign exchange rates had not started accelerating. 

Rising costs, especially with the increase in foreign exchange rates, are seen to immediately trigger product prices and, as well, significant price increases are experienced in those...