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4.2.1 CPI dynamics
TUIK reported on July 3 that Turkey’s official headline CPI inflation fell sharply to 15.72% in June from 18.71% in May.
Although there was absolutely no evidence in English media, Reuters Turkish Service reported that the main opposition CHP spokesman Faik Oztrak voiced further claims over fictional inflation figures.
Credibility of Turkey’s inflation data questioned by opposition motion put to parliament. Turkey's main opposition party has filed a motion to parliament stating that adjustments to the methodology used by the Turkish Statistical Institute (TUIK) when calculating inflation were unprecedented and damaged credibility. In the June 19 motion requesting a response from Finance Minister Berat Albayrak, Republican People's Party (CHP) MP Gursel Tekin asked whether he had requested that TUIK limit the rise in inflation in a "fictional" way. "Since salary hike rates are linked to the rise in inflation, when the announced number is then not in line with real inflation, millions of employees are wronged," he said in the text of the motion. "The unprecedented practices in the April inflation data damage the credibility of the [TUIK] institution," Tekin said in his motion. bne IntelliNews has repeatedly questioned the credibility of inflation data released by the TUIK in recent months. Changes in formulating inflation became particularly evident after some key personnel changes at the institute. Applied economist at Johns Hopkins University Steve Hanke has lately been assessing Turkey’s annual inflation rate as realistically running at around 49%. According to TUIK data, annual inflation slowed to 19.5% in April. It hit a 15-year high of 25% in October last year following the currency crisis. TUIK has previously refuted as untrue claims that its statistics were not correct or were put out under the sway of political influence. In his complaint, Tekin cited an irregularity in data dealing with footwear and clothing, as well as automobiles. He added that analysts believed that changes in two components could affect inflation by 0.5 percentage points. He said the quality adjustment on the clothing index, which was previously around 0.2%, was calculated as 4% in April's data, which he said was "known to be impossible". Such adjustments, based on judgments of the quality of inflation basket items, are generally very low in an effort to maintain the usefulness of the comparison in the data.
Iyi Party MP Aytun Ciray filed a separate motion requesting a response from Finance Minister Berat Albayrak to ask whether he had requested that TUIK limit the rise in inflation in a "fictional" way.
“The sharp decline in Turkish inflation in June, to 15.7% y/y, increases the chances that the central bank will embark on an easing cycle [with a 100bp reduction in the benchmark one-week repo rate to 23.00%], at its policy meeting [to be held on July 25]. But all hinges on what happens to the lira and
26 TURKEY Country Report July 2019 www.intellinews.com