Inflation is 4 times higher than TUIK calculations

By Mehtap Özcan Ertürk, news of Sozcu.com.tr

Turkey Statistics Institute (TURKSTAT) calculated the September CPI inflation as 0.97 percent. However, when data analysist compiled the prices from  markets based on the inflation basket of TURKSTAT, a very different picture appeared. Monthly inflation almost quadrupled to 3.61 percent.

Inflation Research Group (ENAG), a collective of leading academicians, announced that they had begun to calculate inflation of Turkey. ENAG, announcing that they will publish changes in consumer prices on a monthly basis,  calculated  September inflation as 3.61 percent. The alternative calculation indicates that is approximately 4 times higher than the 0.97 September inflation rate level announced by TURKSTAT.

Head of ENAG Economist Prof Dr.  Veysel Ulusoy, uses the common standard inflation calculation model used by other countries. According to the information provided by Prof Ulusoy, who uses the same methodology as TURKSTAT,  TURKSTAT compiles prices from an average of 500 different locations across Turkey.

Ulusoy explains they receive pricing information from at least three times more locations in ENAG’s inflation calculation, underlining the fact that the  market share of outlets selling the subject goods and service is taken into account.

Additionally, the research group gives priority on how much of the whole Turkish population is represented based on the pricing taken from that specific location’s sales numbers, therefore reaches a higher volume of TURKSTAT’s pricing data.

This is how Inflation is calculated by ENAG;

-Gets pricing information from a location at least three times more frequently compared to TURKSTAT

-TURKSTAT uses only 80 percent of the inflation basket

-ENAG uses the same method of TURKSTAT for its calculations

-ENAG does not take education, health sector and alcoholic beverages into account

Stating that they do not include education, health and alcoholic beverages in their calculations contrary to TURKSTAT, Ulusoy explained the reason for this exclusion as follows; “Health and Education expenditures in Turkey are function of  inflation rather than being an independent variable. Therefore, we propose to readjust the weight of these expenditures in the inflation basket.

Ulusoy noted that, for the upcoming period, they will also consider effects of the change in quality as well as the effects of “shrinkflation”, which is  “the hidden inflation created by the reduction of weight in a product”.

Stating that they can also create alternative and dynamic inflation baskets such as “pandemic index”, Professor Veysel Ulusoy continued as follows; “Consumer behavior changed the inflation basket structure. Eurostat advised countries to change their inflation baskets according to the changing consumption habits during the pandemic. They proposed it to Turkey as well, but TURKSTAT did not make any changes. We will also announce the “pandemic index” in November, which is still being finalized.

 

Translation: Cem Cetinguc

 

 

Follow our  English language YouTube videos  @ REAL TURKEY:   https://www.youtube.com/channel/UCKpFJB4GFiNkhmpVZQ_d9Rg

 

And content at Twitter: @AtillaEng

Facebook:  Real Turkey Channel:   https://www.facebook.com/realturkeychannel/

 

Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.