Prof. Dr. Duran Bülbül: 'There is a gross error in TURKSTAT's inflation figures!'

Hazal Güven - 12punto.com.tr 

Millions of minimum wage earners and retirees, condemned to poverty wages, have been the segment hit hardest by the rising cost of living, especially since the pandemic. From shopping bags that barely contain basic food items to the few liters of gasoline put into a car, the arduous struggle against inflation continues. 

Known for its controversial figures, the Turkish Statistical Institute (TURKSTAT) calculated inflation figures this month as it does every month. According to TURKSTAT's calculations, annual inflation in April was calculated at 37.86 percent, while this figure was measured at 3 percent on a monthly basis. 

In addition to TURKSTAT, the independent Inflation Research Group (ENAG) also shared its April inflation calculations. According to ENAG, annual inflation was 73.88 percent, and monthly inflation was 4.46 percent. 

The gap between the figures remains wide, as it is every month. A significant portion of the public is also reacting to TURKSTAT's figures. So, what should we understand from the announced official inflation figures, and how accurately do TURKSTAT's figures reflect reality? Economist Prof. Dr. Duran Bülbül spoke to 12punto... 

How should we interpret the latest announced inflation figures? 

'If we look at the decline in inflation rates, inflation was 38.10 in March and 37.86 percent in April. Now, this is a very contradictory situation. One must ask what changed between April and March. We know that food products increased significantly due to frost. So what happened now? Did food prices drop? Did production increase? No, production also fell. Now I ask; for inflation to fall, these things would need to happen. Did the exchange rate drop? No. Did interest rates drop? No, they actually rose. If you look at oil prices, they also increased. Now, while all these items are rising, we see that an inflation rate is being announced based on the understanding that the economy is not affected by the ongoing political crisis, in an effort to show inflation as low.'

So, will this be successful? 

"This is not true. Because the country experienced a serious crisis in both political and economic terms in March and April. If it didn't experience a serious crisis, where did the Central Bank's 50 billion dollar reserve go? In fact, due to the crisis, inflation forecasts had been completely revised and raised. But now we see that they have been lowered. As you know, the Central Bank has raised policy interest rates again from 42.5 to 46. The inflation figures announced by TURKSTAT do not reflect the reality of the country. It is clear that there is a lack of confidence in the economic management's data because the figures are not announced correctly."

'IT SHOULD BE AROUND 100 PERCENT'

What is the current situation regarding inflation in your opinion? 

"According to our calculations, considering the recent economic and political crises, the annual inflation rate should be around 100 percent. For this reason, if we do not announce economic data correctly, we cannot manage the fight against the economic crisis in the country correctly. We cannot manage the fight against foreign currency, unemployment, inflation, and exchange rates"  correctly. There is a heavy price to pay for not announcing these figures correctly. Not reporting this data accurately causes the country to suffer serious losses in terms of its economic and political reputation. As a result of all this, if inflation figures and interest rates are not announced correctly, this crisis will deepen. Therefore, in my opinion, these figures should be revised and re-announced by TURKSTAT. Otherwise, these figures are null and void. They do not reflect the reality of Turkey either."

'A GROSS ERROR'

I think TURKSTAT made a mistake. Inflation did not fall from March to April; it increased. They should have explained this. Therefore, it is impossible for it to fall from 38 to 37. Both are wrong anyway. The inflation figures announced by TURKSTAT are a gross error." 

The rent increase rate was also determined along with the inflation figures. While TURKSTAT's annual inflation was 37.86 percent, the May rent increase rate rose to 48.73 percent. How do you evaluate this? Is there not a contradiction? 

"When we look at the difference between the inflation figure announced by the Turkish Statistical Institute (TÜİK) and the rent increase rate, we see a serious internal contradiction. TÜİK has effectively announced the official inflation as 50 percent. Because the rent increase rate is the inflation increase rate. When we look at the rent increase rate, it is approximately 48.75 percent. In other words, according to TÜİK, it turns out that inflation in Turkey is now around 50 percent. This needs to be seen first. In a sense, TÜİK has contradicted itself with the figures it announced."

What would you say regarding the items that showed the highest increase? Food, transportation, and housing are leading the way. 

"In addition to these, energy prices have also increased at a very serious rate. Oil prices have increased at a very serious rate. Energy should also have had a place on this list. Because energy costs constitute a significant portion of our production costs. If interest rates rise in the country, prices also rise automatically. In other words, one of the reasons for the increase is that the exchange rate and interest rates have risen. Since these increases also raised costs, inflation increased. We are about 78 percent dependent on foreign sources for our basic products. When the exchange rate rose, our input costs also increased. This should also be added."

News Source: Hazal Güven