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4.2 Inflation
There are widespread concerns about the accuracy of inflation and other data released by TUIK.
October saw the creation of the independent Inflation Research Group (ENAG), led by Istanbul academics. It has started using its own methodology to track Turkish inflation.
ENAG said its assessment was that Turkey in October saw month on month inflation of 2.56%. For September it calculated 6.17% m/m versus TUIK’s 3.1% m/m.
“Wheat supply shortages in Turkey are inflating local flour and food prices,” Erdem Ulusoy, a broker at agricultural brokerage and consulting firm Grains Brokers International (GBI), told Argus on November 6.
These price jumps will not have a negative impact on official inflation. Unofficial inflation is another story but a story rarely told.
Turkey’s main target is to reduce inflation to single digits as soon as possible, then to take it to the medium-term target levels and to ensure that interest rates come down in line with this process, Erdogan said on November 20.
Turkey's released official inflation figures have constantly fallen in the narrow 11-12% band since November 2019, with the figures staying within the even narrower band of 11.75-11.89% since July (See table below).
Erdogan has now given the finance industry the goods, permitting a chunky rate hike. Expect officials to now unveil inflation figures that are conveniently behaving and expect the market to buy the story.
24 TURKEY Country Report December 2020 www.intellinews.com
