ISTANBUL (Reuters] – An unexpected jump in Turkey’s annual inflation to 36.08% per annum in December was reported by data on Monday. The increase is higher than anticipated and the result of a decline in the value the lira last year.

The Turkish Statistical Institute reported that consumer prices increased 13.58% month-on-month compared with a Reuters poll of 9%. Inflation was forecast to rise by 30.6% annually.

After the data, the lira traded at 13.6 against USD. This was 3% less than the previous day and 3% below its early low of 13.92. After volatile November and December, it lost 44% of its value in the last year.

In December, the producer price index grew 19.08% monthly for an increase of 79.89% annually, according to the data. The rise in import prices caused by the currency crash is reflected in the data.

The CPI Annual was at its highest since September 2002’s 37.0%. This occurred before President Tayyip Turkey’s AK Party took power in November. There were 13 forecasts from economists ranging between 26.4% – 37.3%.

Transport prices rose 53.66% in a year, and heavy-weighted foodstuffs prices rose 43.8%. This led to higher consumer prices.

“This shows a vicious cycle in demand-pull, which is dangerous because the central banking had implied that price pressure was caused by supply constraints, but it couldn’t make any changes to it,” Ozlem Derici Sengul from Spinn Consulting said.

She stated that rates should immediately be raised aggressively. “Annual inflation is likely to reach 40-50% in March.”

The recent inflation rate has hovered around 20%, driven by an unprecedented slide in the lira, which was driven by lower interest rates after Erdogan’s central bank cut its policy rate 500 basis points from September.

The central bank stated that temporary factors are driving inflation higher, and predicted that the long-term trend of inflation will be volatile.

After a December record low of 18.4 against USD, the lira rebounded sharply following state-backed market interventions. Erdogan also announced a plan to safeguard lira deposit against currency volatility.

For most of the past five years, inflation has been in excess of emerging market peers and mostly in the double digits. This is affecting Turks’ earnings as well as reducing public support for Erdogan.

In a late October report, the central bank forecasted that year-end inflation would be 18.4%.