Sat. Jan 22nd, 2022

Istanbul, Turkey – At a products stall in Istanbul’s Balat neighborhood this week, the owner, Selamet, took a break to serve customers to talk about something that affects everyone in Turkey – rising food prices.

“Some things did not rise as much as others because their production continued, but others, especially the items most bought here, rose more,” Selamet told Al Jazeera.

Prices of popular items including potatoes, onions, eggplant, green beans and other vegetables have risen by more than 50 percent, he said.

Food is not the only thing that takes a bigger bite of its customer’s income. The government agency tasked with tracking inflation – the Turkish Statistical Institute (also known as TUIK or TurkStat) – said this week that the consumer price index, or CPI – measures changes in the prices of a basket of commonly purchased goods and services. – rose to more than 36 percent last month compared to a year ago.

This is the sharpest inflation peak in almost 20 years. But Selamet believes even that staggering figure underestimates the severity of price pressure lying on him and his customers.

“They [TurkStat] must choose and choose which products they include, or which markets they go to to achieve record prices, ”said Selamet. “After all, they are a state department, and if they say inflation is much higher, the government will also have to pay more wages and pensions. [to retirees]. What we really need is someone else to come up with a measure of inflation. ”

He is not alone in thinking so. A survey published this week by MetroPoll research found that more than 90 percent of respondents think annual inflation is at least 50 percent or higher. More than 60 percent of respondents rate it at 100 percent or higher.

Social media accounts dedicated to documenting the price increases have emerged, including Inflation Diary, a Twitter account with more than 100,000 followers who post photos of the public showing price tag changes in grocery stores.

Last month, social media users began sharing videos of an unidentified man running naked through the streets of the southeastern city of Sanliurfa at night, shouting “Inflation, Inflation!” The man appeared to be recreating scenes from the 1985 Turkish film, Naked Citizen, centered around a government worker who, unable to cope with the rising costs, took to the streets at night to protest inflation.

Non-governmental assessments of inflation support public perceptions. The Inflation Research Group (ENAGroup) an academic project that has been independently monitoring price changes since 2020, publishes its own consumer price index – E-CPI – every month within hours of TurkStat’s.

According to ENAGroup’s calculations, Turkey’s annual inflation rate was 82.81 percent in December – more than double the official rate.

TurkStat insists that its CPI accurately measure inflation. Last year, it filed a criminal complaint against ENAGroup, claiming that the independent researcher had misled the public. Turkish authorities have since opened an investigation into ENAGroup.

TurkStat has reason to be concerned about inaccurate independent inflation measurements, says İbrahim Karataş, a columnist for the Daily Sabah newspaper and general manager of the ANAR polling company, which also provides political parties, including the ruling Justice and Development Party ( AKP)), with election statistics.

“In every poll, you can see that the main problem is the economy, and actually inflation,” he told Al Jazeera.

The public’s increased focus on inflation could skew TurkStat’s measurements, he said, adding that the government agency’s CPI reflects economic reality more accurately and that the average consumer is not necessarily well placed to estimate price pressures with as much accuracy.

“Sometimes some prices go up and some go down, and sometimes all the prices go up and then it goes down, but we just look at the ones that go up because it grabs your attention because it went up,” he said. “When a price for something is low, you see it as normal, but when it is high, you react to it.”

The lira crash and inflation

While nations around the world are struggling with price increases caused by supply chains and shortages of raw materials, inflation in Turkey has been exacerbated by a dramatic drop in the value of the Turkish lira, which has lost more than 40 percent of its value. the US dollar last year.

The lira’s collapse in the last quarter of 2021 was caused by a series of interest rate cuts in the central bank advocated by Turkish President Recep Tayyip Erdogan, who insist that lower interest rates combat rising inflation – a view that is contrary to mainstream economic theory , which indicates the lower loans. costs typically increase price pressure.

While Erdogan’s government has chaired a dramatic increase in Turkey’s economic growth over its 19 years in power, with elections scheduled for next year, the president this week acknowledged the burden that inflation places on Turkish voters, while they reassured that rising prices would be brought. heel.

“We are sad to see our annual inflation reach 36 percent,” Erdogan said. “Nevertheless, as a government that has managed to reduce inflation to 6 percent, we will repeat our success in protecting Turkish citizens from financial difficulties.”

To help curb the rise in prices, the government this month increase the minimum wage by 50 per cent and boosted the government’s contest on private contributions to public pensions. In late December, in an effort to stem the collapse of the lira, the government also launched a scheme to protect holders of lira deposits from losses if the currency’s decline exceeds bank interest rates. Deposits in the scheme have reached 84 billion lira ($ 6.21 billion), the country’s finance minister told state news agency Anadolu on Tuesday.

Yet, to some extent Turkey’s confidence in the lira, more than 60 percent of all bank accounts in the country are currently in foreign currencies such as the dollar or euro. The minimum wage increase was also accompanied by price increases in regulated sectors of the economy. Electricity tariffs rose by 125 percent for customers with greater demand and 50 percent for residential customers with lower demand. Natural gas prices rose by 50 percent for industrial use and 25 percent for residential use. And the cost of public transportation in Istanbul has seen a 36 percent increase.

Politics and inflation

Turkey’s opposition parties have seized on the difference between official TurkStat inflation figures and what many members of the public and experts think.

Ali Babacan, a former Erdogan ally who served under him as finance minister and now heads the Democracy and Progress Party, called TurkStat the “Institute for the Adjustment of Numbers” in a tweet short after the December inflation figures were released.

Last month, during a live television broadcast, the head of the main opposition party, Kemal Kılıçdaroğlu, tried to visit TurkStat’s headquarters in the capital Ankara to inquire about how inflation is calculated, only to be turned away.

Independent inflation measures were also investigated by the government. ENAGroup is currently facing an investigation by authorities after TurkStat said the research project confused the public by calling its measurements a “consumer price index”.

ENAGroup says its inflation meter – which started as a doctoral dissertation – provides a valuable civil service.

“We started because we thought there was a missing part of the story,” says Veysel Ulusoy, a professor of economics at Yeditepe University in Istanbul who is leading the project.

“Every day we can measure things like the interest rate or the Borsa Istanbul [stock] index, or the stock index on Wall Street, but the missing point was the daily inflation rate, simply because the daily inflation rate is not only affected by the daily changes in economic life, but it also affected all of them, ”he said. he told Al Jazeera.

Inspired by the Billion Prices Project, an academic initiative launched by Harvard University and MIT in 2008, Ulusoy’s team of economists and engineers use software to search the Web, collecting approximately 250,000 price points from Turkish retailers daily. and more than 700 million monthly, Ulusoy said.

The group grinds the high-frequency data using the same methodology as TurkStat. Prizes are placed in categories, such as food, transportation, communications, or leisure and culture. Each category is then weighted by how much an average consumer would spend composing a “basket” of goods and services – for example, 26 percent for food and 16 percent for transportation. Finally, about 20 percent of the basket prices come directly from TurkStat, for products such as alcoholic beverages, or health and education costs, which are regulated by the government.

The main difference between ENAGroup and TurkStat, Ulusoy said, is that its project measures and publishes prices daily as well as monthly, and that TurkStat sends its own researchers into the streets to collect prices, rather than using big data tools. Those software calculations, Ulusoy said, are checked by his team. He insists that they accurately reflect inflation in Turkey.

For most of the past year, ENAGroup’s inflation measures have far exceeded TurkStat’s official benchmark. Ulusoy said he now meets regularly with government officials in Ankara to explain his research. He said he did not expect the investigation to become more serious, but if it did, he thought it would lead to a sound public comparison with official inflation figures.

Economist Atilla Yesilada, an analyst at GlobalSource Partners who has studied inflation patterns in countries around the world, said the government has a lot of incentive to keep official inflation figures lower – and to challenge alternative measures like ENAGroup’s – because public sector For example, wages as well as pensions for retirees are calculated directly on inflation rates. Any increase in the official inflation rate will therefore ultimately cost the government.

And while lower official inflation figures to observers outside Turkey may indicate that the economy is not doing as badly as it may, public perceptions within Turkey are not as easy to manage, Yesilada told Al Jazeera.

“We live with inflation in Turkey,” he said. “The biggest components of what we spend money on are food, rent and transport, and these are the kind of prices that the average consumer faces daily or monthly. So if you lie to them, it’s very clear. It undermines confidence in Erdogan and the AKP. “

He further warned that the Turkish public’s perceptions of inflation could also cause prices to rise higher. “If people think inflation is close to 100 percent, anyone who has any bargaining power says in paying salaries or wages, or the prices they ask, pretend inflation is 100 percent,” he said. “So going forward, it’s a disastrous situation.”

Karataş, who discussed the inflation issue with TurkStat staff, said the body was not deliberately trying to manipulate any statistics, and was in fact following the same globally accepted methods it had been using for decades.

“It is not that Turkey is different in terms of its dimensions,” he said. “As TUIK [TurkStat] is wrong, then the measurement is wrong for everyone [in the world], and if it’s correct, then it’s right for everyone. In the end, we have to prove someone wrong. If you do not believe in TUIK, then you have to prove it. ”

Source link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *