Turks skeptical of official inflation figures, say they are higher

Experts and the Turkish public are highly critical of the state's official inflation rate of 14.6 percent, as they say that the real inflation is much higher than the announced rate.

Tuesday January 05 2021 02:20 pm

K. Murat Yıldız / Duvar English

A higher than expected 14.6 percent increase in consumer prices was announced by the Turkish Statistical Institute (TÜİK) on Jan. 4. A poll conducted early last month by Reuters predicted an increase of 14.2 percent, while Anadolu Agency's poll forecast was 14.3 percent.

However, experts and the public have argued that the real inflation is much higher than the official rate which was announced.

Some products saw a price increase of over 100 percent

“The actual inflation is much higher than the official announcement. There are products that we use in our hotel which have had a price increase of over 100 percent, such as vegetable oils. We used to buy a pack of eggs for 12 liras, now it is 34 liras,” Ercüment Gündüz (45) a hotel manager on Istanbul’s Princes’ Islands told Duvar English.

“Our operating costs increased by 60 percent last year, despite our prices being 20 percent lower. I go to the farmers' market every week. Normally, I would spend around 70 liras for my family’s weekly needs. Now it costs more than 200 Liras.”

The government's accounting doesn’t add up

Both the annual and monthly inflations rates announced by TÜİK satisfied neither experts nor the public. The Turkish government's official data has long been criticized. So, in this case as well, people are pointing out that the government's accounting is not adding up.

“The inflation rate the public is experiencing is not even close to the announcement amount. Of course, people have the tendency to feel that official data does not represent reality, but it is a fact that any attempt to downplay inflation is destined to fail if authorities cannot convince both the public and investors of it,” economist Cüneyt Akman told Duvar English.

“The parliament needs to establish a working commission which includes the relevant state and independent institutions that will establish trust, oversee the collection of data, and provide logical explanations for the differences between official statistics and independent ones,” Akman added.

Inflation Research Group (ENAGrup) says annual inflation at 36.72 percent

One of those institutions Akman pointed at is the Inflation Research Group (ENAGrup) established by prominent Turkish bureaucrats, economists, and academics. ENAGrup came up with an annual inflation rate of 36.72 percent, much higher than the official rate announced by TürkStat.

According to a poll conducted in December by MetroPoll, one of Turkey’s major polling companies, 51.3 percent of those surveyed stated that their cost of living has increased over 30 percent, while 16.5 percent said the inflation rate which they have experienced during 2020 is between 20 and 30 percent. Only 14.1 percent said that their cost of living had increased by 14 percent. Another 14.1 percent said it was between 14 and 20 percent during the previous year.

Central Bank’s 2021 end year inflation target of 9.4 percent

The Central Bank has forecasted 9.4 percent inflation by the end of 2021 and 5 percent in the medium term.

Experts point out that in order to achieve these medium and long-term inflation goals in 2021, the government must stick to its promises of reform and strict monetary policies.

“In the upcoming period, the tight monetary stance will continue until strong indicators point to a permanent decline in inflation and price stability,” Turkish Central Bank Governor Naci Ağbal said recently.

Accuracy of data and forecasts crucial for a healthy economy

“In our economy, the official forecasts and data announcements are crucial for the public and investors. If the data and forecasts do not prove true over time, the market balance will suffer. Consumer behavior, supply, and demand will all be affected,” Professor Veysel Ulusoy of Yeditepe University and Chair of the EnaGrup told Duvar English.

“If the data and forecasts regarding development, especially unemployment and inflation, do not represent the reality, we cannot even talk about a healthy economy” he warned.