✔ The rapid decline in the annual inflation rate in the coming months will not be done by playing with the rates, nor by a package of measures to be put into practice…
✔ There is no secret to this fall! It’s just math!
✔ Of course, a decrease in the inflation rate does not mean a decrease in prices. Prices will continue to rise.
Briefly “lower inflation” The concept expressed as “lower inflation rate”is But this is absolutely, absolutely “prices falling” is not.
Politicians, the fall in inflation, fall that will not be achieved, will want to launch as if prices have decreased. We will experience this situation in the coming months. I don’t know how many times I wrote; but it was necessary to address this issue once again and reveal all the numbers.
Annual inflation rate will go down sharply from December; That’s for sure if there are no extraordinary developments. This decline will continue in January, February, March and April. So much so that, according to the OVP, the annual rate, which is expected to peak at 83-84 percent in October this year, will drop to 35 percent in March.
From 83 to 35, a drop of 48 points!
It would not be correct to immediately attribute this to the wrong measurement, to the justification of playing with the ratios. Even with 100 percent accurate measurement, the annual rate will decline rapidly. Because it’s a mathematical fact.
However, the decline in the annual rate of increase in inflation will not necessarily mean that prices have fallen.
Request mixing This is the desired situation. Yes mixing desired condition.
It is desired that people get the perception that when the inflation rate decreases, prices also decrease. In case of a decline in prices, the concept of inflation is now shelved. In the case of a continuous decline in all prices, we no longer speak of inflation, but of deflation.
CONTINUE INFLATION, hailed slowdown!
In this corner on September 9 “December-January illusion in inflation” I addressed this topic. There was a graphic in that article. This time, I wanted to present the data that make up the graph in the form of a table for your information.
What will happen starting from December and how will the annual inflation rate decline to 50 points in five months.
There is no secret!
There is no extraordinary program to achieve this regression!
There are no great steps to be taken!
It’s just math!
The first part of the table includes the consumer price index (CPI). Consider the CPI as the average price of 400 or so goods and services. Or choose your own method for easy calculation and think of CPI as any other expenditure item.
For example, your monthly gas cost…
For example, your monthly cigarette money…
For example, your monthly gas expense…
Now think about it this way and see if there is a regression from month to month.
You spent 1,016 liras in August this year, and this expenditure is increasing. It’s November, monthly spending is 1,103 liras and an increase of 82 percent compared to last year.
In December, your spending increased by 30 liras and increased to 1,133 liras. But what is that! The rate of increase in money out of your pocket, which was 82 percent in November compared to last year, decreased to 65 percent in December.
Attention; money out of your pocket increasing but the rate of increase in this money falling!
There is no magic, no deception…
Jump to the side table now!
In December, the annual inflation rate of 13.58 percent for December 2021 was removed from the annual inflation account, and a much lower rate of 2.78 percent was entered instead. (2.78 percent, the monthly average increase assumption that will keep the annual 65 percent predicted in the MTP. The monthly assumption is 1.87 percent for 2023.)
Your monthly natural gas expense, cigarette money or the amount you pay for gasoline increases to 1,155 liras in January, 1,176 liras in February, 1,198 liras in March, and 1,221 liras in April.
There is always an increase. But there is always a decrease in the annual inflation rate.
Because the high rates of 2022 come out of the last year’s calculation, and the low rates of 2023 enter in their place.
“How do we know that the rate of price increase will remain at this level in 2023” Of course you can say. It’s a forecast based on the medium-term program I made. Let’s say the monthly increase is not 1.87 percent, but 2.87 percent, 3.87 percent; In the first four months of 2023, the annual inflation rate will still continue to decline. Because you see the yellow boxes in the table, the rates in the first four months of this year are very high.
EXPENDITURE WILL NOT REDUCE; ALWAYS MORE, ALWAYS MORE!
If everything goes as planned and as envisaged in the medium-term program, the annual inflation rate will decrease to 24.90 percent by the end of 2023.
Well, the increase in the annual inflation rate will decrease from the current 80 percent to 25 percent from 65 percent, which is expected to occur at the end of this year, will it mean that this citizen’s livelihood has come to an end?
The trouble of livelihood ends or is alleviated on one condition. If the citizen is given a raise much higher than inflation for a period and then inflation slows down…
However, what is happening now; As spending continues to increase, the rate of change of this increase will slow.
Once the increase will not stop.
Second, let’s assume that the increase stopped somewhere, does not stop, or suppose it happened. For example, today wages and prices are frozen. With this income and these prices, can people live in prosperity? for example, can they easily buy a house or a car, or go on vacation easily; what a trip!
Therefore, the decrease in the rate of increase in inflation will be presented as if the prices have decreased and the citizens have a much more comfortable living. This will be the main propaganda material of the coming months.
Of course, interest rate cuts will be shown as the reason for this propaganda. That’s why I’m guessing that interest rate cuts will continue… Besides, there is an interest rate that has lost its importance and has no determinant for any policy. I suppose “It doesn’t matter anyway, at least let’s use it for the decrease in the inflation rate” it is called.