Cost of Russian crisis continues to rise
Mustafa Sönmez - Hürriyet Daily News, March/07/2016 After Turkey shot down a Russian war plane along…
Growing mistrust in Turkey’s official inflation data fueled political tensions last week as the main opposition leader was barred from entering the building of the Turkish Statistical Institute (TUIK), the government agency tasked with compiling and sharing various data.
Shortly after the TUIK released the latest inflation figures Dec. 3, Republican People’s Party (CHP) leader Kemal Kilicdaroglu sped to the TUIK headquarters to seek answers amid doubts over the inflation data. The institute said consumer prices rose 3.5% in November from the previous month, while pundits had expected a rate of about 5%. Security guards speaking from behind the iron bars of the TUIK’s gated entrance turned the CHP leader away, saying they were following instructions. The head of the institute works directly under President Recep Tayyip Erdogan.
The dramatic depreciation of the Turkish lira has sharply stoked prices in Turkey amid growing suspicions of TUIK bias in measuring inflation. A group of independent economists known as the Inflation Research Group has made an alternative measurement, turning up results that dwarf the official figures. Though the group’s methodology is open to question, its work has increasingly attracted public attention and irked the TUIK. In February, the TUIK filed a criminal complaint against the group for attempting to defame the institute.
The official inflation figures are of crucial importance for the populace as they bear on wage, salary and pension hikes as well as rents and taxes. The soaring inflation has been eroding the purchasing power of large labor groups that often lack collective bargaining rights or the organizational power to secure pay rises in line with the inflation. About 20.5 million people live on wages and salaries in Turkey, while more than 10 million, including retirees, widows and orphans, rely on pensions from the state.
The TUIK’s inflation data has come under criticism from large segments of Turkish society who believe that the official figures fail to fully reflect the skyrocketing prices on the market. Accusations that the TUIK is biased and produces data at the behest and to the liking of Erdogan have grown more vocal in recent months.
Indeed, the November inflation data contains a series of dubious findings. For instance, rent increases — an item that weighs heavily on the index — stand at an annual of 13%, while critics note that anyone could observe that rents have increased by more than 20% this year. In another striking discrepancy, the TUIK finds that automobile prices rose by less than 10% in November, while they surged by at least about 30%, fueled by the slump of the lira. Similarly, food prices, another major component of the inflation index with which consumers deal on a daily basis, including the prices of basic items such as bread, cheese and meat, have soared on much higher rates than the figures released by the TUIK.
It was in this climate that Kilicdaroglu tried to meet with TUIK officials. “I requested an appointment from the TUIK. They didn’t give me one. For your information, I’m coming to you at 11 o’clock,” he tweeted to the institute before his attempted visit.
Speaking after he was denied entry to the building, Kilicdaroglu called the TUIK’s inflation figures “unreliable” and denounced the institute for refusing to clarify how it compiles the data. “They refuse to speak to the main opposition leader about data that belongs to the state and how it is being collected. The doors have slammed shut. This is unprecedented in republican history,” the CHP leader grumbled.
He expressed suspicion that the TUIK might be “trimming the numbers and presenting them to the public as accurate” as part of government attempts to lessen payments to public servants, workers and pensioners. “If I stay silent to that, what’s the sense of me doing politics?” he said.
The government reacted furiously. Interior Minister Suleyman Soylu accused Kilicdaroglu of “emulating” terrorists and thugs in an attempt to “storm” the TUIK office. Erdogan fiercely defended the TUIK, saying the opposition cannot call state institutions to account. “They are accountable only to those responsible — primarily the president and, additionally, the relevant ministers,” he said.
According to the TUIK, annual consumer inflation hit 21.3% in November, while producer inflation reached nearly 55% — an omen of a rampant uptick that could hardly be camouflaged in the coming months.
With consumer inflation threatening to jump to the region of 30-40% down the road, surging prices have become a key factor fueling disgruntlement with the government, primarily in low- and middle-income groups suffering sharp losses in their real income. Allegations that the inflation surge is not being calculated through proper scientific methods or is being distorted are only fanning the popular disenchantment and anger.
The government’s performance in terms of inflation has notably worsened since Turkey’s transition to an executive presidency system in 2018. The annual inflation rate has averaged 18% in the past four years, a far cry from the single-digit rates in the Justice and Development Party’s first 15 years in power. Consumer inflation is expected to climb close to 23% by the year-end, fueled mainly by the crash of the lira, which has lost some 40% of its value this year.
For Turkey’s import-reliant economy, the slump of the lira has meant an ever-growing cost of imported goods and materials, with year-on-year increases in the average price of the dollar reaching 22%. As a result, the prices of locally produced goods and services have kept soaring as well.
To top it all, Ankara’s negligence of the agricultural sector and its failure to grant farmers adequate support have resulted in supply shortages, an additional factor pushing food prices up.
According to Birol Aydemir, who headed the TUIK for five years until 2016 and is now deputy chair of the opposition Democracy and Progress Party, the current managers of the TUIK are not independent and impartial figures but rather government protégés who follow instructions. Kilicdaroglu was too optimistic to expect an appointment and any meeting would have been futile anyway, Aydemir said. “During my term [as head of TUIK], I never turned down any politician or civic society [representative] who wished to come and obtain information. Rejection is wrong,” he added.
Any efforts to conceal inflation will become harder in December and next year, given the unruly upsurge in the prices. One could already see that the monthly inflation rates are likely to exceed 5% in the coming period.