How serious is inflation in Turkey?It depends on who you ask | Business and Economic News

Istanbul, Turkey- This week, at an agricultural product stall near Bharat, Istanbul, the owner Selamet took a break while serving customers, and talked about something that affects everyone in Turkey—— Food prices are rising.

“Some things have not risen like others because their production has been keeping up, but other things, especially the most commonly purchased items here, have risen more in price,” Seramette told Al Jazeera.

He said that the prices of popular commodities including potatoes, onions, eggplants, green beans and other vegetables have soared by more than 50%.

Food is not the only thing that takes up more revenue from customers. The government agency responsible for tracking inflation, the Turkish Statistics Agency (also known as TUIK or TurkStat), said this week that the Consumer Price Index, or CPI, measures changes in the prices of a basket of commonly used goods and services— Soared above 36% Last month compared with a year ago.

This is the worst inflation spike in the past 20 years. But Selamet believes that even this staggering number underestimates the severity of the price pressure on him and his customers.

“them [TurkStat] They have to pick and choose the products they contain, or which markets they go to to achieve record prices,” Seramette said. “They are government departments after all. If they say that inflation is much higher, the government has to pay more wages. And pension [to retirees]What we really need is other people’s methods to measure inflation. “

He is not the only one with this idea. A survey released this week by MetroPoll Research found that more than 90% of respondents believe that the annual inflation rate is at least 50% or higher. More than 60% of respondents rated it as 100% or higher.

Social media accounts dedicated to recording price increases have sprung up, including the Inflation Diary, a Twitter account with more than 100,000 followers that posted photos from the public showing changes in grocery store price tags.

Last month, social media users began to share a video of an unidentified man running naked on the streets of Sanliurfa in the southeastern city at night and shouting “Inflation, inflation!” The man appeared to be recreating a 1985 Turkish movie The scene in “Naked Citizen” (Naked Citizen) revolves around a government worker who cannot cope with rising costs and takes to the streets at night to protest against inflation.

Non-governmental assessments of inflation support public perception.This Inflation Research Group (ENAGroup) is an academic project that independently tracks price changes since 2020. It publishes its own consumer price index-E-CPI within a few hours of TurkStat’s release every month.

According to calculations by ENAGroup, Turkey’s annual inflation rate in December was 82.81%, more than twice the official inflation rate.

TurkStat insists that its CPI accurately measures inflation. Last year, it filed a criminal lawsuit against ENAGroup, claiming that the independent researcher misled the public. Turkish authorities have since launched an investigation into ENAGroup.

Sabah Daily columnist and general manager of the ANAR polling company Ibrahim Karatas (İbrahim Karataş) said that the Turkish Statistics Office has reason to worry that independent inflation measurements may be inaccurate. The company also provides political parties, including justice and governance Development Party (AKP)), and election indicators.

“In every opinion poll, you can see that the main problem is the economy, which is actually inflation,” he told Al Jazeera.

He said that increasing public attention to inflation may distort TurkStat’s measurement results, adding that the CPI of government agencies more accurately reflects economic reality, and ordinary consumers may not be able to accurately estimate price pressure.

“Sometimes some prices rise, some prices fall, and sometimes all prices rise and then fall, but we only focus on the rising price because it needs your attention because it rises,” he said. “When something’s When the price is low, you will think it is normal, but when the price is high, you will react.”

Lira crash and inflation

Although countries around the world have been struggling to cope with the soaring prices caused by the chaotic supply chain and shortage of raw materials, the sharp decline in the value of the Turkish lira has exacerbated the inflation in Turkey, and the value of the Turkish lira has fallen by more than 40%. Last year’s dollars.

This Lira crashes A series of central bank rate cuts supported by Turkish President Recep Tayyip Erdogan triggered a rate cut in the last quarter of 2021. He insisted that lower interest rates can counter rising inflation. This view runs counter to mainstream economic theory, which believes that lower borrowing costs usually increase price pressure.

Although Erdogan’s government has presided over the rapid growth of Turkish economic growth during its 19 years in power, and elections are scheduled to be held next year, the president acknowledged this week that inflation has burdened Turkish voters and assured them of soaring prices. Will bring heels.

Erdogan said: “We are very sad to see our annual inflation rate of 36%.” “Nevertheless, as a government that has managed to reduce the inflation rate to 6%, we will repeat our success. Protect Turkish citizens from financial difficulties.”

To help alleviate the impact of rising prices, the government this month Raise the minimum wage 50%, and promoted the government’s matching of private contributions to public pensions. In late December, in order to prevent the lira from plummeting, the government also launched a plan to protect lira deposit holders from losses if the lira depreciates more than the bank interest rate. The country’s finance minister told the national news agency Anadolu on Tuesday that the plan’s deposits had reached 84 billion lire (6.21 billion U.S. dollars).

Nevertheless, when measuring Turkish confidence in the lira, more than 60% of the country’s bank accounts are currently in foreign currencies, such as the U.S. dollar or the euro. The increase in the minimum wage has also been accompanied by price increases in regulated economic sectors. Electricity bills for high-demand customers rose by 125%, and residential customers with low-demand electricity bills rose by 50%. The price of natural gas used for industrial purposes has risen by 50%, and the price of natural gas used for residential purposes has risen by 25%. The cost of public transportation in Istanbul has increased by 36%.

Politics and inflation

The opposition party in Turkey has captured the discrepancy between the official inflation data of the Turkish Statistics Agency and the thinking of many members of the public and experts.

Soon after the December inflation data was released, Ali Babacan, a former Erdogan ally who served as Minister of Finance under Erdogan and is now the leader of the Democratic Progressive Party, called TurkStat in a tweet as an “adjusted number study”. Place”.

Last month, in a live television broadcast, Kemal Klichdaroglu, the leader of the largest opposition party, tried to visit the headquarters of the Turkish National Statistics Office in the capital Ankara to ask about inflation calculations, but was rejected.

Independent inflation measures have also caused government scrutiny. After TurkStat said that the research project called its measurement results “consumer price index” and confused the public, ENAGroup is currently facing an investigation by the authorities.

ENAGroup stated that its inflation indicator-originally a doctoral dissertation-is implementing a valuable public service.

“We started because we thought there was a missing part in this story,” said Veysel Ulusoy, professor of economics at Yeditepe University in Istanbul, who is in charge of the project.

“Every day, we can measure interest rates, or the Istanbul Stock Exchange [stock] Index, or Wall Street stock index, but one thing missing is the daily inflation rate, because the daily inflation rate is not only affected by the daily changes in economic life, but also affects everyone,” he told Al Jazeera.

Ulusoy’s team of economists and engineers drew inspiration from the “Billion Price Project” academic initiative launched by Harvard University and MIT in 2008, using software to search the Internet, and collecting approximately 250,000 prices from Turkish retailers every day Points, more than 700 million are collected every month, Urusoy said.

The team uses the same method as TurkStat to process high-frequency data. Prices are classified by category, such as food, transportation, communications or entertainment and culture. Then, each category is weighted according to how much ordinary consumers spend on it to compile a “basket” of goods and services—for example, 26% of food and 16% of transportation. Finally, about 20% of the package price comes directly from TurkStat, which is used for products such as alcoholic beverages, or health and education expenses regulated by the government.

Ulusoy said that the main difference between ENAGroup and TurkStat is that his project measures and publishes prices every day and every month, while TurkStat sends its own researchers to the streets to collect prices instead of using big data tools. Ulusoy said his team conducted random checks on these software calculations. He insisted that they accurately reflect Turkey’s inflation.

For most of last year, ENAGroup’s inflation indicators far exceeded TurkStat’s official indicators. Urusoy said that he now meets regularly with government officials in Ankara to explain his research. He said that he does not think the investigation will become more serious, but if it does, he believes it will lead to a healthy comparison between the public and official inflation data.

Economist Atilla Yesilada is an analyst at GlobalSource Partners. He has studied inflation patterns in countries around the world. He said that the government has enough incentives to reduce official inflation data — and challenge alternative measures such as ENAGroup — because of public sector wages and pensions. For example, for retirees, it is calculated directly based on the inflation rate. Therefore, any increase in the official inflation rate will ultimately cost the government.

Yesilada told Al Jazeera that although the lower official inflation data may send a signal to observers outside Turkey that the economy is not as bad as it is now, the public perception in Turkey is not so easy to manage.

“We are living with inflation in Turkey,” he said. “The biggest components of our money are food, rent, and transportation. These are the prices that ordinary consumers face every day or every month. So if you lie to them, it is obvious. The trust of AKP.”

He further warned that the Turkish public’s perception of inflation would also push up prices. “If people think that the inflation rate is close to 100%, anyone who has the ability to negotiate, such as paying salaries or wages, or the prices they charge, will pretend that the inflation rate is 100%,” he said. “It’s a catastrophic situation to go forward.”

Karataş, who has discussed inflation with TurkStat staff, said that the agency is not deliberately trying to manipulate any statistical data. In fact, it follows the same globally accepted method that has been used for decades.

“Turkey’s measurement standards are not like this,” he said. “If TUIK [TurkStat] Is wrong, then everyone’s measurement is wrong [in the world], If it is correct, then it is correct for everyone. Finally, we must prove that someone is wrong. If you don’t believe in TUIK, then you should prove it. “