"Hidden Impoverishment" behind Inflation Rate

Öngel, Head of the Socialist trade union DİSK Research Institute, warned that the latest inflation figures did not reflect consumer spending by the poor and that people experienced a "hidden impoverishment".

The Turkey Statistical Institute (TÜİK) announced that in 2011 the consumer price index (CPI) increased by 10.45 percent and the producer price index (PPI) by 13.33 percent. In comparison with December 2010, the CPI increased by 0.58 percent and the PPI by one percent.

As of December 2010, according to a twelve-month average, the yearly inflation was at 6.47 percent related to consumer prices and 11.09 percent for producer prices.

Compared with 2010, the highest increase in the 2011 CPI occurred in the product group of alcoholic beverages and tobacco with 18.5 percent. Transportation cost increased by 12.22 percent, food and non-alcoholic beverages by 12.21 percent, household goods by 11.04 percent and miscellaneous goods and services by 17.14 percent.

"Low-income groups ignored"

Serkan Öngel, Head of the DISKAR Research Institute of the Confederation of Progressive Trade Unions (DİSK), evaluated the fresh inflation figures for bianet. Öngel drew attention to problems regarding the way Turkey's inflation figures were being determined.

Looking at the consumption expenditure of households when determining the inflation basket, the low-income group included in this structure does not sufficiently reflect the inflation rate, Öngel underlined and explained:

* One of the most expensive items purchased by high-income groups is a car. The purchase and sale of vehicles have a very heavy weight in the inflation basket. His has a direct impact on 20 percent section of the society.

* Technological products that become cheaper constantly are part of the inflation basket too. Consequently, falling prices due to technology developments pull down the inflation rate.

* However, this means nothing to sections of society with high spending on food and housing. In fact, this induces their impoverishment. The people are experiencing a hidden impoverishment because of price drops that are not related to their lives.

"Problems in inflation data"

Öngel emphasized that the income level has to be taken into account when determining the inflation rate. Wage increases have to be considered according to the income of the poor, he claimed.

Öngel pointed out that on an annual basis the prices of many products were raised in line with the inflation target. He also reminded the fact that besides inflation taxes were raised for many products.

"It is strange when the inflation rate remains at 10 percent while the prices for many products were raised by 15 percent", Öngel remarked. Hence, either the data for the inflation rate is problematic or the way the data is being interpreted by the government, Öngel added. (EKN/VK)



İstanbul - BIA News Center

04 January 2012, Wednesday

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