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Turkish Central Bank Policy Rates
hovering around the policy rate, but remember, this is the official inflation number we are talking about; it has little relation to the reality of price growth that is a painful everyday experience for ordinary Turks up and down the country.
Istanbul's Inflation Research Group (ENAG), headed by academics, has been compiling its own inflation data based on the methodology of the official statistical institute, TUIK, since August 2020. Its August inflation release shows monthly inflation at 4.06% versus the TUIK’s 1.12%.
Having been researching inflation for a year by now, ENAG had a chance to release an annual inflation figure for the first time, but nothing appeared in its bulletin. This group, a real thorn in the side of the government, is of course subject to an ongoing criminal probe following a complaint from TUIK.
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Nevertheless, we can calculate that the annual inflation rate for August this year implied by ENAG’s releases since August last year stands at around 49% y/y.
It would be nice if the only abnormality in Turkey’s inflation presentations was the consecutive record spreads between the official consumer price index (CPI) and producer price index (PPI) inflation figures.
To get a taste of the real price increases that the Turks are experiencing, take a look at what’s facing construction industry contractors, once celebrated for driving a Turkish growth boom. They have lately been up in arms over a 200% y/y increase in the cost of cement.
Then there is the serial price growth in gas. Turkey's natural gas distributor Botas raised natural gas prices for industrial use and electricity production by 15% as of September 1. Previously, it hiked the residential natural gas price by 12% as of July 1. Also, in the first half of this year, Botas pushed up the residential natural gas price by 1% each month.
Moreover, Botas increased the natural gas price for power plants by 20.23% as of July 1 and prior to that, as of June 1, the gas price for power plants was hiked by 1% following
a 12% hike as of May 1.
There’s a similar picture with electricity, while there is no disputing soaring prices in food and basic consumption
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