Yesterday’s inflation data showed us this very fact: Despite all efforts, we have sadly lost 2018. The situation we are in is not even remotely close to play Champions’ League group matches, which means we cannot dare to say, “We made a mistake and we lost the match. In the next one, we will win”, because, we should first give our best efforts to prevent things from getting even worse.
While Ankara is looking completely different drivers behind high inflation than the ones Istanbul is currently looking for, I, on the other hand, would like to make a realistic analysis why inflation turned out to be much higher than expected.
First of all, recent increases both in PPI and Core Inflation is showing us that conjunctural reasons do not lie behind price hikes, which means inflation will keep rising further over the next quarters. The fact that especially the PPI has exceeded 45% is a clear indicator that we are slowly destroying the success we had over the last 15 years. Considering the YEP (New Economic Program) sets a growth target between 2 to 3%, Turkey may be more likely to face stagflation.
“Forget the past and look forward ?!!…”
Believe it or not, some people still think inflation can be reduced by higher economic growth and I am afraid they will convince Ankara to do so. If Turkey once again goes into overdrive to achieve even higher growth, it would just be a matter of time that inflation hits even more terrifying levels.
In addition to the fact that it’s one of the key factors in making National Accounts clearer and more comprehensible, inflation is a result, yet it may also become a trigger of many unwanted side effects. If inflation keeps rising further, the zeroes we have removed years ago might return with even more strength. Three-digit figures have already replaced two-digit price in price tags. We must take the necessary measures as immediate as possible if we do not want to see four-digit figures soon.
As I have mentioned many times before, the most important danger we may face regarding inflation is “getting used to it”; because, once this downward spiral of inflation rate kicks off, there may be no coming back. So, we should admit the fact that the passing of time will resolve problems and start taking drastic measures, if necessary, as soon as possible.