‘Turkey’s consumer inflation rate was 36.72 percent in 2020’

* Photo: Anadolu Agency (AA)

Click to read the article in Turkish

Established by a group of academics and announcing alternative inflation rates in Turkey, the Inflation Research Group (ENAG) has estimated that the country's consumer inflation rate was 36.72 percent in 2020. The group has also said that the monthly inflation rate was 4.08 percent.

Earlier today (January 4), the Turkish Statistical Institute (TurkStat), the state agency commissioned with producing and sharing official statistics on Turkey, announced the country's inflation rate in 2020 as 14.6 percent on an annual basis and 1.25 percent on a monthly basis.

CLICK - Annual inflation rate according to TurkStat: 14.6 percent

Enflasyon Araştırma Grubu Raporu:

Aralık ayı enflasyon oranı: %4.08

2020 yılı enflasyon oranı: %36.72

Haber Bültenleri için: https://t.co/dSKjyUGYOQ

— ENAG (@ENAGRUP) January 4, 2021

In a statement released within this context, the Inflation Research Group (ENAG) has indicated that it has obtained the related results by implementing the econometric models developed by using the Central Bank, TurkStat and IMF data, especially in such a way that the impacts of the experienced shocks are also incorporated into the evaluation.

Accordingly, the group has stated that "the economic stagnation that started in Turkey in the second quarter of 2018 and was accompanied by the exchange rate shock in the third quarter proved to be the major factors that affected the high inflation in 2020."

"In fact, as the effects of the shock were still in place in the fourth quarter, it has permanently increased the prices," the group has noted, adding that "coupled with the weak economic growth performance in 2019, the cost and demand shock continued all year long."

The group has reminded the public that, in 2019, "the inflation rate hit the highest level of the last years and saw the highest rate in the last 20 years.

According to the ENAG statement, "in the first quarter of 2020, when the foreign exchange transitivity relatively slowed down, this time, a new fragility affected by the output gap (different from the real GDP potential) came up and it has deepened further due to the COVID-19 health crisis."

"The foreign exchange shock brought about by the wrong timing of the Central Bank's interest rate decisions was added to this and 2020 ended with a high inflation rate," the group has concluded.

About Inflation Research Group

The Inflation Research Group (ENAG) was established by a group of academics with the aim of announcing the inflation rates in Turkey on an hourly, daily and monthly basis. The group aims to momentarily calculate the inflation data by momentarily following the changes in exchange rates, interest rates and share prices at the stock exchange.

The ENAG announced its first data in September 2020. According to this announcement, the monthly inflation rate was 3.61 percent while the TurkStat announced the same rate as 0.97 percent.

There are 418 items in the index of the TurkStat and the ENAG's index has 314 of these items, which accounts for 80 percent of TurkStat's index. The remaining 104 items are not included in the calculation by the ENAG on the grounds that they do not have a significant effect on inflation and do not completely reflect the consumption behaviors.

However, in order to enable a comparison with the TurkStat's inflation rate, the price changes in these 104 items are taken from the TurkStat and added to the inflation rate calculated by the ENAG as the remaining 20 percent. So, while the items' index and weights are handled in the same way as the TurkStat, there are differences in measurement and methodology.

TurkStat was previously criticized for adding or excluding certain items in calculating the inflation rate. (HA/SD)