Turkish inflation almost four times official tally, study finds

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Inflation in Turkey was almost four times greater than official figures showed in September, according to a new measure devised by academics and researchers.

Prices rose by 3.61 percent last month compared with August versus the 0.97 percent increase reported by the Turkish Statistical Institute (TÜİK), according to the independent Inflation Research Group (ENAG).

“We observed price differences and volatility in almost all groups in the basket,” Veysel Ulusoy, head of the group and a professor at a university in Istanbul, said in an interview with Reuters this week. ENAG’s management is comprised of academics from several Turkish universities.

Inflation in Turkey was 11.8 percent in September, official data showed. Some economists and local commentators have questioned the reliability of the numbers, with the latter pointing to political appointments at TÜİK and price changes of goods on supermarket shelves.

ENAG did not provide a year-on-year figure for inflation.

The researchers base their estimate on more frequent data than the statistics office and can calculate inflation as often as every hour, Ulusoy said. They weigh items in the same way as TÜİK, but exclude data from health, education and alcoholic drinks.

The price of tablets and computers rose more than 30 percent in September from August due to schools re-opening, Ulusoy said. Official data put the figure at around 4 percent.

Turkish Treasury and Finance Minister Berat Albayrak received written queries about the accuracy of inflation data last year from opposition politicians in parliament, who said they were altered for political reasons. The head of the statistics office dismissed the allegations.

Turkey’s central bank has kept interest rates at below the rate of inflation this year as the government encouraged a borrowing boom led by state-run banks designed to boost economic growth. President Recep Tayyip Erdoğan replaced the central bank’s chief last year for failing to back government policy.

Erdoğan has also sacked about a dozen top officials at TÜİK by decree since gaining enhanced executive powers at presidential elections in 2018, including the regional heads of several large cities responsible for collecting data. That has raised suspicion that the institution has been politically compromised.

Press reports in 2018 claimed that TÜİK was ordering retailers to temporarily discount prices before officials called them to collect data. Annual consumer price inflation hit 25 percent in October 2018 in the aftermath of a currency crisis that sent the lira tumbling to record lows.

Annual inflation in Turkey has remained almost unchanged over the past three months even after the lira hit fresh record lows. Losses for the currency this year total about 25 percent.

Many Turks have sold liras for dollars, euros and gold to protect savings as the currency depreciated.

Confidence in Turkey’s economic data must be re-established, former Deputy Prime Minister Ali Babacan, who ran Turkey’s economy under Erdoğan between 2002 and 2015, aside from a brief spell as foreign minister, said in June. He now heads a rival political party.

Babacan spoke hours after Erdoğan dismissed 10 regional heads of TÜIK, including for Istanbul, the southern city of Antalya, Turkey’s industrial heartland of Bursa, and for Konya, a manufacturing hub in Anatolia. He provided no explanation for the firings.

The head of TÜİK is Muhammed Cahit Şirin. He was appointed in May and is married to the private secretary of Erdoğan’s wife Emine. The president acted as a witness at the couple’s wedding in June last year.

Ahval

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