* Data pressures central bank to keep tight policy
* Erdogan wants lower rates to boost growth
* Transport and education prices push inflation up (Adds Simsek comments)
By Daren Butler
ISTANBUL, Sept 5 (Reuters) - Turkey’s annual inflation rose more than expected to 10.68 percent in August, data showed on Tuesday, fuelled by rising transport and core prices.
It will have increased pressure on the central bank to stick to tight policy.
Inflation, which has been in double digits for six out of eight months this year, remains one of Turkey’s most pressing economic problems, forcing the central bank to maintain a hawkish stance even as President Tayyip Erdogan has called for lower rates.
On a monthly basis, consumer prices quickened 0.52 percent, the data from the Turkish Statistical Institute showed. That exceeded the 0.15 percent increase forecast in a Reuters poll.
“The jump in Turkish inflation last month to 10.7 percent (year-on-year) means that the interest rate cuts we had expected before the end of the year are looking less likely,” said William Jackson of Capital Economics in a note to clients.
“While we still think the central bank will loosen monetary policy over the next 12 months, there is now a risk that this will begin later and be slower than we had originally anticipated.”
Education prices saw a 2.79 percent month-on-month increase, while transport prices climbed 2.05 percent, the data showed. Key food and drink prices dropped 0.22 percent on the month.
CPI core “C” inflation, which excludes energy, food, drink and tobacco, rose to 10.16 percent from 9.60 percent a month year earlier.
The lira eased to 3.4465 against the dollar after the data, from around 3.4385 beforehand.
Erdogan, who wants to see looser policy to spur lending and boost the economy, has described himself as an “enemy” of interest rates.
The government has rolled out a series of measures to bolster growth, including temporary tax cuts and the expansion of a programme to guarantee loans to smaller businesses.
Deputy Prime Minister Mehmet Simsek said the rise of inflation to double-digits was temporary, and added that he expected inflation to fall below 10 percent by the end of the year as a result of the measures.
Separately, the manufacturing PMI business survey showed that manufacturing activity in August saw its strongest improvement since early 2011.
Producer prices rose 0.85 percent month-on-month in August for a year-on-year rise of 16.34 percent.
Additional reporting by Behiye Selin Taner and Tuvan Gumrukcu; Writing by Daren Butler and David Dolan; Editing and Graphic by Jeremy Gaunt