Turkey investigates academics after they report higher inflation data

Turkish prosecutors began an investigation into a research group for publishing alternative inflation figures that showed prices increasing at a much faster pace than official data.

Prosecutors are acting on a criminal complaint by the Turkish Statistical Institute (TÜİK), which says that Istanbul-based ENAGroup, made up of a team of local academics, failed to publish sufficient details concerning the methodology of its data and sought to mislead the public.

"Content of the criminal complaint is limited to the fact that the relevant group does not publish the necessary explanatory information with their news bulletins," TÜİK said in a statement on Monday. "It is not related to the results of the published study and it is also not intended to prevent or stop the studies they have performed." 

The inflation data published by ENAGroup is consistently higher than government figures. In April, it said prices increased by a monthly 2.62 percent, more than double the 1.1 percent reported by TÜİK, also known as Turkstat.

ENAGroup was accused of “purposefully defaming” TÜİK and misguiding public opinion, Bloomberg said at the weekend, citing unpublished documents concerning the probe. The investigation could result in fines, it said.

Inflation in Turkey has climbed to 17.1 percent, more than three times the central bank’s goal of 5 percent and is the fastest in major emerging markets outside of crisis-hit Argentina. But many Turks have complained that the figures do not reflect reality, pointing to a sharp increase in shopping bills. High official inflation has prompted the central bank to hike interest rates to 19 percent, curbing the country’s economic growth prospects.

"This is disgraceful. Why is Turkstat bothered?" Tim Ash, senior emerging markets strategist at BlueBay Asset Management, said in comments on Twitter. "It adds to the debate. Let people read the analysis and decide for themselves. It shows just how far credibility has collapsed in state institutions that these state institutions now feel so threatened."

ENAGroup reported annual inflation in Turkey of 36.7 percent for 2020. The official rate was 14.97 percent. It does not publish annual data in its monthly reports, which are released on the same date as TÜİK’s figures.

The body aims to “damage and discredit the Turkish Statistical Institute”, Treasury and Finance Minister Lütfi Elvan said on Thursday.

TÜİK filed its complaint in February and prosecutors summoned members of ENAGroup last month, said Veysel Ulusoy, the head of the organisation and a professor of economics at Yeditepe University in Istanbul, according to Bloomberg. The group denies the charges and such a “rudimentary investigation” potentially damages TÜİK’s reputation, Ulusoy said.

ENAGroup says its figures are based on live price changes and cover virtually the same basket of goods as TÜİK. It publishes a one-page explanation of the methodology of its calculations.

The group has published its inflation calculations as if they were official statistics, misinforming the public, TÜİK said in Monday's statement. It referred to a tweet in English on January inflation data as an example:

Institutions typically formulate independent inflation data in countries where trust in official figures has diminished.

The lira has dropped to successive record lows against the dollar after Turks sought to protect their savings from high inflation, which has curbed returns from holding the local currency in deposit accounts. The lira was trading down 0.2 percent at 8.25 per dollar on Monday, close to a record low of 8.58 per dollar reached in November.

Turkish President Recep Tayyip Erdoğan has frequently replaced the head of TÜİK, without providing reasons, most recently at the start of March. It was the fourth appointment in less than three years.

(This story was updated to insert missing word in the third paragraph.)