Turks puzzled by gap between official inflation figures and shop prices

When the Turkish Statistical Institute (TÜİK) published its latest inflation figures, the popular satirical website Zaytung shared a photo-shopped visual showing dozens of people waiting outside its offices with the caption “visitors flood to the TÜİK building, the only place in Turkey where inflation is at 8 percent”.

A recent survey by pollster Metropoll showed that the percentage of people who do not trust TÜİK’s inflation figures increased to 40 percent in October from 35 percent in September, after the institute said inflation had fallen to an annual 8.6 percent in October from 9.3 percent the previous month.

Those figures are a cause for alarm, said financial analyst Atilla Yeşilada, as people make their decisions according to data they find reliable, which is a risk for the success of any government’s economic programme.

Disbelief in official figures is widespread in Turkey, which witnessed inflation jumping to a high of 25.2 percent in October 2018, the highest level in a decade-and-a-half, after a currency crisis hit the country in August the same year. Those suspicious of TÜİK data include both ordinary citizens and politicians like Mehmet Berkaroğlu, a lawmaker for the main opposition Republican People’s Party (CHP), who said last week that even members of the ruling party had been laughing at the rates.

“Inflation is around 1,000 percent,” said a shopkeeper in Istanbul’s mainly conservative Fatih district. “And in these times if you tell the real figures for inflation, it’s for sure you will go to jail.” 

Abdullah Çelik, another small business owner, believed inflation was above 15 percent. “They are not telling the truth,” he said.

Turks were also sceptical of official inflation figures in the first decade of the millennium, when Turkey for the first time strictly implemented a disinflation policy. Such scepticism in part is related to people’s general ignorance on consumer price index (CPI) calculations, which is based roughly on the consumption basket of the median household.

“But the more than 400 goods and services in this basket have different shares or weights for each household according to income levels,” said Seyfettin Gürsel, the director of Bahçeşehir University Centre for Economic and Social Research in Istanbul. Hence, low income households, for whom basic goods and services have a higher weight, are more sensitive to rapid raises in food prices.

Food inflation is more than twice the headline CPI inflation, while rent increases are about 18 to 20 percent, said economist Güldem Atabay, an Ahval contributor. Yet wage earners in Turkey have received pay rises at a level well below the average inflation. “Thus, they turn sceptical, questioning government meddling with the figures,” Atabay said.

“Moreover, an ordinary person does not know the difference between disinflation and deflation,” Gürsel said. People generally expect prices to fall when inflation rates decline, and doubt the credibility of official data when they observe price increases in the market.

But the current situation is quite different from previous spells of suspicion about inflation data, according to Güventürk Görgülü, an academic at Istanbul Bilgi University’s Communications Department. “Today there is the impression that targets are not set according to data, but the data has been produced according to targets set,” he said.

Such perceptions are a result of the government’s questionable economic policy, such as President Recep Tayyip Erdoğan’s sudden decision to sack the governor of the central bank in July for declining to decrease interest rates.

In October last year, when inflation was at its peak, Treasury and Finance Minister Berat Albayrak, also Erdoğan’s son-in-law, removed a TÜİK senior official who had managed the inflation calculation department for years and appointed a long-time ally. Following that, some opposition outlets said that TÜİK officials had been informing government-affiliated supermarket chains before their data-gathering visits so they chains could decrease their prices beforehand.

Even if such rumours have some truth to them, they will not significantly lead to an underestimation of the CPI, said Gürsel. Yeşilada confirmed Gürsel’s comments, saying that reliable economists he had talked to believed these methods could only have a marginal effect on the overall inflation rate.

TÜİK is one of the most well established state institutions in Turkey, and was among the first to harmonise its methods to those of the European Union following the start of accession talks with the bloc in 2005. “TÜİK is not defending itself effectively,” Gürsel said. “It is very weak in public communications.”

According to Gürsel, the opposition media is also stirring up public suspicions. “In doing so, they use economic terms incorrectly, mainly because of their ignorance. But citizens who are ready to believe easily rise to the bait,” he said.

Meanwhile, pro-government media outlets use bizarre concepts to describe economic developments, like using the term “price updates” for price rises, or present only the most positive economic indicators.

“To be honest, Turkey’s press has never been good in dealing with numerical data,” Görgülü said, adding that for years interpreting economic figures has been left to the columnists at major outlets.

“Now, since most of those columnists are almost totally excluded from the media, there is nobody left to evaluate the official figures,” he said. “It is impossible to say that society is being sufficiently informed. When you see the popularity of economists’ YouTube channels or personal blogs, you can see how people with an interest in the economy have been accessing news,” he said.

Nevertheless, according to the Metropoll survey, the share of people who believe in TÜİK’s figures is almost the same as disbelievers, leaving aside those undecided.

Emine Demir, a vendor in Fatih’s Karagümrük is one of the believers. “The prices are quite normal,” she told Ahval. “The government’s prices match ours.”

The opinions expressed in this column are those of the author and do not necessarily reflect those of Ahval.