✔ Annual CPI increase will probably reach the peak of 86-88 percent in October, it can be passed at this level in November, and the decline will begin with December.
TurkStat announced the consumer price increase as 3.08 percent and the producer price increase as 4.78 percent in September. It is not easy to make an estimation about producer prices anyway. Is 3.08 percent in consumer prices a very low and surprising rate; To be able to say this, there must be another healthy measurement at hand. The 6.06 percent increase announced by the Istanbul Chamber of Commerce may provide a limited opportunity for comparison. Because both the base year and the covered items of the ITO index are very different. While it is normal to have a monthly difference between TurkStat and ITO rates, it is checked whether the two rates diverge in the long term. Here is the problem, the increase in the last year is 83.45 percent in TURKSTAT and 107.42 percent in ITO. The parallelism between the annual increase of the two indices has been broken since March and the gap is getting wider.
We know that in TURKSTAT “some things” It started to change like March-April. We see the result…
Peak in October or November
Annual consumer price growth of 83 percent at the end of September will likely peak at the end of October. If we exclude 2021, October is already the month with the highest increase of the year. It would not be a surprise to see an increase of around 4-5 percent this month. In this case, the annual increase will be between 86-88 percent at the end of October.
November can be passed at almost the same rate with very little play. After that, the known base effect will come into play and the decline will begin.
By the way, let me touch on a subject that is very confusing. Whether you apply the base effect to the rates of TURKSTAT or the ITO, the result does not change. The annual rate will fall again, will fall again!
It is not well understood why I insist on this subject so much, or my shortcoming, I cannot explain it well.
I want this subject to be well understood; because the base effective fall will not be the result of any decision or action, that is, a skill, it will happen spontaneously. I’m trying to make sure that those who try to take a share from it are more knowledgeable.
Why are we in this situation?
Of course, monthly rates are important in inflation, but how the general trend is, it is much more important.
Central Bank interest rate, inflation and inflation in the 21 months since January last year. dollar You can see the exchange rate in the table. What has happened since September of last year?
No need to repeat proportions and numbers.
It’s clear how we crashed…
We also created a chart to see the trend better. I wonder if we accept the December of 2020 as 100, we wanted to see what direction the Central Bank interest, the annual CPI increase of TUIK, the annual wage earner index increase of ITO and the dollar rate draw.
Here you go! Where did we come from, right?
Of course there is also a question “Why” the question is.
We know that the current 12 percent interest It will drop to 9 percent in December. Anyhow “base effect” the annual inflation rate will also decrease, so why not lower the interest rate!
CITIZENS ARE BOTH RIGHT AND WORTH IT WHILE COMPLAINING ABOUT INFLATION!
The monthly increase announced by TUIK as 3 percent and the annual increase announced as 83 percent are low. Citizens say that the inflation they experience and feel is much higher.
I’ve written about the reasons for this several times.
It won’t hurt again…
There are about 400 goods and services under the CPI. The ratio described, even if completely correct, represents an average.
For example, the weight of rent in the CPI is 4.4 percent. For those who live in their own house, it is meaningless to include rent in the CPI. Is it possible for the renter to find a house for rent by paying 4.4 percent of his income?
Therefore, those who do not live in rent; smoker, non-smoker; sending or not sending their child to private school; those who go to work with their own car, those who do not; who bought a car that month or that year, did not; with many children, few children or no children…
The cost of two children of the same age or even twins can be different.
Therefore, an ideal inflation rate cannot be calculated for any household, and no person or institution can do this.
Let’s first accept this fact.
Let’s go the other direction…
It is very easy to say that TURKSTAT does not make realistic measurements. But we need to look into some details.
The increase in the last year is 83 percent, but this rate is the average of about 400 goods and services. So how much has there been an increase in some sectors in the last year:
■ 117 percent in transportation.
■ 93 percent in food and non-alcoholic beverages.
■ 90 percent in household goods.
■ 85 percent in housing expenditures.
Lower increases pushed the average to 83 percent.
What about the right sides?
Let’s get to the other side of the coin…
As income decreases, items of expenditure decrease; Although no one consumes all the goods and services that make up the index, low-income people inevitably go to consumption restrictions. Now consumer goods are only essentials. Even some of the essential consumer goods are given up.
Turkey is experiencing this. Incomes have fallen so much in real terms that people only food and shelter in the effort. Here, the expenditure on shelter and food is also increasing, and since this increase is much higher than the average rate, the statement made cannot be trusted.
What is worse and worse is that those in power also show the approach that this is enough.
But there is worse. The fact that the number of people who find it normal while having such difficulties in living is not to be underestimated.
DO I TRUST THE TURKSTAT DATA?
I get asked this question so many times these days…
It seems as if someone will trust TUIK according to my answer to this question or vice versa.
Then I will say:
I do not trust!
Confidence in TURKSTAT was already weak, and this trust was completely destroyed by the abandonment of the disclosure of material prices and the changes in the management positions, which were frequently consulted.
But I don’t trust not only TURKSTAT, but any study that can’t clearly reveal its methodology, doesn’t explain item prices, doesn’t even share its index with the public, or doesn’t have historical data.
I suggest those who ask me this question to examine the details of some studies that they believe in.
If they can find it!
My suggestion is to academic friends who have knowledge of economics who can make this study rather than citizens.
Do not forget; A higher ratio does not always mean more accurate.