In a written statement, the Turkish Statistical Institute (Turkstat), stated that “the news about the difference between perceived inflation and official CPI was distorted” in some media outlets and social media accounts. The stats agency was responding to a new item in premier economics news site Ekonomim. Com, which claimed in its internal communications Turkstat cited “inflation on the street” as 100%.
Turkstat explained “perceived inflation” was calculated based on the answers given to the question “How many percent do you think consumer prices increased/decreased in the last 12 months?”, which was asked to participants in annual “consumer trend survey”, which is also used to change weights of the components of CPI.
Turkstat emphasized that the micro data of the survey in question is available to all researchers who request it through TÜİK Data Research Center.
Then, Turkstat went on to defend itself against unending accusations of lowballing inflation to curry favor with Erdogan administration:
“It is manipulative and malevolent to criticize the official CPI data based on the results obtained from a single-question data set, which reflects the inflation perception of consumers in the past 12 months. It is quite natural that the consumer’s inflation forecast and the CPI differ”.
Yep, this is true, inflation, like beauty is in the eye of the beholder.
But,
“The proportional difference between perceived inflation and CPI is in European Union countries is 5 to 6 times of the official data, this difference being much lower in our country”.
We think this is iffy. Are Americans and European are so differentiated by their consumption baskets that say a minority would perceive inflation at 10, 12% per annum, when the official data shows only 2%.
Finally, Turkstat lets the cat out of the bag:
“At the end of 2023, the annual rate of change in the CPI is 64.77 percent, while the consumers’ estimate is 96 percent.”
Ninety-six percent? This is much higher than what many analysts think the true CPI is. The main stream estimate of true CPI is 10-15% higher than the official.
Turkstat probably didn’t foresee what a maelstrom of controversy its statement would stir up, instead of ending the debate. The chairman of a group of academicians which provide an alternative estimate of inflation, ENAG, Prof Veysel Atasoy urged citizens to sue Turkstat for forgery, noting that annual or semi-annual wage and salary hikes are based on inflation data.
Several economists mocked the agency for estimating the inflation of the well-heeled, who theoretically speaking pay a lower share of their budgets in food, heating and transportation vis-a-vis the rest.
PA Turkey raises the question whether TurkStat does enough to minimize the difference between measured and perceived inflation by correctly re-basing the components in the CPI basket?
Turkish opposition is certain to pounce on the Turkstat announcement to blame the government for raising wages and salaries less than warranted by law and condemning the working class and retirees to poverty using Turkstat.
PA Turkey speculates that heads will roll in Turkstat, though a realistic estimation of actual CPI is probably not in the works.
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