How Many More Revisions Do We Need!?


Although there was a noticeable decline in the Istanbul Chamber of Commerce Cost of Living Index compared to September, the cost of living in Turkey still turned out to be around 3%, which directed all expectations towards the CPI index announced by TurkStat.

Despite the government’s efforts to prove its “if interest rates fall, so will the inflation” argument, everyone in their right mind knows that the recent fall in inflation rate was due to the base effect. However, the significant lack of compatibility between the figures published by the Istanbul Chamber of Commerce and those by TurkStat is regarded as a worrying situation. For instance, in September, the CPI was announced as half of the Istanbul Chamber of Commerce cost of living index. In October, they were very close to each other.


This morning, when the Inflation Research Group ENAG announced an inflation rate of 4%, I thought “TurkStat will probably announce a rate that is half of the one informed by ENAG”. Unsurprisingly, that was almost exactly what happened.


“Examine the market at every level.”


Turkey currently has the highest rates of food inflation in the world, and it therefore has a lot of work to do other than cutting interest rates to prevent price increases. The Ministry of Economy, which tries to control the markets merely by publishing new regulations in the country’s official gazette, should closely monitor all layers of the economy, from production to sales, but instead of doing that, the Ministry chooses to put pressure on retail end sellers alone and I do not see it as an effort that will yield successful results.


“We know what you are doing”, these types of statements, which sadly became a typical reaction among the government officials responsible for the economy, does not only bring about questions like “Since you know what they are doing, why aren’t you doing anything to stop it?”, but it also violates proper governance codes. The free market system in Turkey has been considerably deteriorated of late. The government must carry out an effective supervision and monitoring of all layers of the market and the economy, starting with unfair tax practices in customs territory. Under unfair tax standards, an average of 540 Euros is collected from importers for each of the 9 million containers entering Turkey. But nobody talks about the inflationary effects of this tax burden, which means an extra cost of billions of Euros.


Since it is understood that neither the central bank’s forecast of 65% inflation for 2022 nor 60% estimated in the MTP will come true, I strongly suggest companies make their own inflation index before looking at official figures and predictions. It would not be wise to prepare financial statements based on official inflation or official expectations.