Jul 04 2019

Turkey's eerie inflation stirs more suspicion over data - columnist

Turkey’s June inflation figures are creating more suspicion about data accuracy after they eerily matched the predictions of analysts, said Uğur Gürses, a columnist and former central bank official.

The Turkish month-on-month inflation rate was 0.03 percent in June, the Turkish Statistical Institute (TUIK) reported on Wednesday. It also said annual inflation slowed to 15.7 percent from 18.7 percent, easing below the government’s year-end goal of 15.9 percent.

Gürses, who is the former lead economy columnist for the Turkish daily Hürriyet, said the monthly figures compared with predictions of 0.05 percent in surveys by Reuters and Bloomberg HT. Meanwhile, data and news provider Forex had estimated a rate of 0.03 percent and the state-run Anadolu news agency a rate of 0.08 percent. 

Therefore, inflation of 0.03 percent for June “hit the needle on the head”, Gürses said.

Turkey’s main opposition Republican People’s Party (CHP), whose economic team is led by former Treasury Undersecretary Faik Öztrak, has called on the statistical institute to explain how it calculates inflation and other economic data. There is very serious concern over the quality of the figures, the CHP says. Öztrak served in the Treasury under prime minister now President Recep Tayyip Erdoğan last decade and was a key implementer of a successful IMF loan programme that stressed transparency.

Suspicion was raised last year after a former adviser to Turkish Treasury and Finance Minister Berat Albayrak, the son-in-law of Erdoğan, was put in charge of collecting inflation figures as prices surged towards a three-decade high. The adviser now serves as deputy head of the organisation.

Among the claims made by the CHP are that companies receive phone calls to forewarn them that officials collating inflation data will be visiting to check prices on shelves. The businessmen were allegedly told to cut prices before the inspectors arrive, Öztrak said, according to Gürses.

Concern over a possible deterioration in data quality is occurring after the introduction of a full presidential system for Turkey in July, Gürses said.

TUIK needs to respond to requests for information from the CHP and others in order to clear the clouds of suspicion, he said.

“We know what happened to Argentina and Greece during the past quarter of a century – reports were drawn up on the request of political leaders that misled the public and showed the situation to be better than it was,” Gürses said. “The citizens of those countries paid a very heavy price.”

Gürses, who has won awards for his analysis of Turkey’s economy, left Hürriyet a year ago after the newspaper was acquired by a business ally of Erdoğan. In his final column for Hürriyet, Gürses wrote that a decision by Erdoğan on the day of his July inauguration to reduce the term in office of central bank managers to four years from five compromised the bank’s independence from politics.