Research group finds Turkish inflation running at triple official rate

Research group finds Turkish inflation running at triple official rate
Many Turks have no faith in the official inflation data (pictured is an entrance to Istanbul Metro's Sisli station outside Istanbul Cevahir shopping mall).
By bne IntelIiNews October 22, 2020

Turkish monthly inflation was more than triple the official rate in September, according to a new model developed by a group of academics and researchers. The model is said to be based on more frequent data than the government statistics office TUIK collects.

Turkey’s Erdogan administration has in recent years been accused by opposition parties and some academics of publishing inflation statistics that bear little relation to reality.

Veysel Ulusoy, a professor at an Istanbul-based university and head of the independent Inflation Research Group (ENAG), told Reuters the model collects “several times more” price data than the official TUIK tally, and is meant to complement it.

‘3.61% not 0.97%’

ENAG’s first published finding shows that Turkish consumer prices in September rose 3.61% from the previous month, compared to TUIK’s calculation of 0.97%. The group will not be able to publish an annual inflation assessment until it has collected data for another 11 months. Official annual inflation stands at 11.75%. A bne IntelliNews Turkey correspondent says many Turks will tell you it is actually running at at least 30%.     

 “We observed price differences and volatility in almost all groups in the basket,” Ulusoy was cited as saying in an interview.

In early October, a former TUIK chief who is now an opposition party politician said Turkish economic data were “detached from reality” with statistics officials picked for their loyalty to the Erdogan administration rather than merit. “When you tamper with data, you are treading the Greek path,” Birol Aydemir told Bloomberg, referencing the distorted accounting of Greek public finances that helped helped trigger the 2009 eurozone crisis.

ENAG brings together academics from multiple Turkish universities.

“TUIK collects 550,000 prices for all the basket items in a month. ENAG calculations include several times more than that, constructing a richer set of data,” Ulusoy was further quoted as saying.

Filling gaps

The ENAG model can calculate inflation as frequently as every hour, meaning it can fill gaps for researchers and investors, Ulusoy added. It weighs items in the same way as TUIK, but excludes price data from health, education spending and alcoholic drinks.

The September calculation showed that school-related items had the most price spikes including computers, tablets and mobile phones, as well as children’s’ clothing and some agricultural goods.

Ulusoy said the ENAG model showed that tablets and computer prices were up more than 30% in September from August due to school reopenings. TUIK put these items at around 4% m/m.

Last year opposition parties submitted parliamentary questions to Finance Minister Berat Albayrak over claims that TUIK tweaked inflation data for political reasons. The head of the institute categorically rejected the claims.

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