Turkey is one of those countries where official data are released to confound, rather than enlighten the body public. There is widespread disbelief in the monthly CPI-PPI figures published by the Turkstat, with poll after poll showing that household perceive a much higher inflation rate. Since all public salary and wages, as well as pensions and the minimum wage are adjusted based on Turkstat, Turkish people rightly feel they have been cheated out of their rightful income by the administration.
Another piece of critical data which guides monetary policy also turns out to be trash. The Central Bank of Turkey (CBRT) collects forecast from ca 50 “market experts” to gauge inflation expectations, which demonstrate significant declines in 12- and 24-month forward horizons, rapidly approaching towards CBRT 2024 and 2025 targets. The Monthly Participants survey was widely mocked by economists. Finally, CBRT admitted that basing monetary policy on the survey is grossly misleading, beginning to collect alternative data from households and businesses. The CPI predictions it found are literally “out of this world“. Similar data collected by prestigious Koc University and KONDA polling agency, too, find incredibly high inflation expectations.
According to CBRT governor Mr Cevdet Akçay, monetary policy shall take these alternative survey results into account.
What did the surveys reveal?
The sectoral inflation expectations of the Central Bank of the Republic of Turkey pointed out that the gap between the expectations of market participants and households has widened. There was a moderate increase in individuals’ inflation expectations in July, too. According to the sectoral inflation expectations report of the Central Bank of the Republic of Turkey (CBRT), 12-month ahead annual inflation expectations for households increased by 0.5 points to 72 percent in July.
According to the same report, it decreased by 1.8 points to 30 percent for market participants, and to 55 percent by 1.2 points for the real sector. The rate of households expecting inflation to decrease in the next 12 months decreased by 4.2 points compared to the previous month and reached 29.3 percent.
Koc U – KONDA survey: “Perceived inflation” is in triple digits!!!
The May results of the Turkish Household Inflation Expectations Survey (TEBA), prepared by Koç University and Konda Research, have been announced. The research, conducted between 17-19 May 2024, aimed to measure the inflation expectations of the population over the age of 18 in Turkey.
As a result of telephone interviews with 2,867 people living in 74 provinces and 1414 different neighborhoods, the annual inflation expectation as of May 2024 was announced as 113 percent, and the year-end inflation expectation was announced as 92 percent.
Household annual inflation expectations decreased by 6 points in May compared to the previous month, falling to 113 percent. Household year-end inflation expectations decreased by 4 points in May compared to the previous month, falling to 92 percent.
When the survey was divided into rural, urban and metropolitan areas according to the types of settlements in which individuals live, it was observed that the expectation of price increases increased from rural to metropolitan areas. While the price increase expectation of those living in rural areas was 93 percent, this rate was measured as 89 percent in the city and 95 percent in the metropolis. When an analysis was made according to the working status of the interviewees, the group with the highest inflation expectation was retirees. The retired group was followed by the unemployed.
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