BY ALAATTIN AKTAS
Almost all built consensus for the September inflation forecast at 5%. The Turkish Statistical Institute (TurkStat) released it at 4.75%. That’s the problem I mentioned in the title! What is left to write?
A 25% HIKE IN A QUARTER!
Something has happened to TurkStat for three months!
Or has TurkStat been made to cause something to happen?
If there is such a situation, Treasury and Finance Minister Mehmet Simsek is probably the one who made it possible.
Inflation soared by 9.49% in July, 9.09% in August, and 4.75% in September.
The 3-month hike totaled 25.11%. A disastrous rate!
The annual surge hovers around 61.53%. The September data corresponds to the half of the inflation in July and August. Don’t be surprised if people are willing to tell this as a success story!
But ask them how the annual inflation is in the countries with terrible economics, empty supermarket shelves, and miserable citizens, and how it can be 3.7% in the U.S. and 5.2% in the Eurozone!
ANNUAL TARGET IS STILL 5%!
We experienced a 25% inflation in three months; our annual inflation forecast is 65%, and our inflation target is still 5%! That looks like the FX rates estimation. The target is 5% with no specific date!
The 9-month hike reached 49.86%. Achieving the annual inflation forecast of 65% for the year-end 2023 in the Medium-Term Economic Program (OVP) will be possible if the surge totals 10.1% in the last three months.
WILL IT TOTAL 10.1% IN THE LAST THREE MONTHS?
The monthly rate averages 3.26% to give 10.1% in a total of three months. The annual forecast of 65% will be achieved if inflation remains at this level in total in October, November, and December.
That is obviously not easy. Although it is hard to estimate, especially the course of fuel prices and FX in the last quarter, there is a reality that we have already known. Just as the calculation change in May regarding the impact of natural gas prices on the consumer price index (CPI) nulled the inflation hike in May, the opposite will happen in winter when natural gas consumption will increase, and natural gas will significantly raise the CPI in November and December.
That’s why I don’t see the annual inflation possibly remaining at 65% at the end of the year. Again, I state that my forecast is 70-75% on a wide margin and 73-74% on a narrower margin.