The topic is inflation and of course it concerns us all and is very important. The detail of the issue is a data set that we have “longed for” and almost forgotten for a long time; namely, the prices of the products included in the CPI.
I wrote about this in this column yesterday. The subject is important, but I admit that it is also a bit complicated. Today, in a sense, I will try to give a technical explanation of yesterday’s article. Although I explained how I arrived at these prices yesterday, it would be useful to repeat and elaborate once again.
Let me state the following first. The prices I have given as June 2024 prices were calculated by me. These are not data taken from TurkStat or anywhere else.
Again, as I mentioned yesterday, some of these prices may differ slightly from the prices that TurkStat takes into account in the calculation of inflation, and I will explain this as well.
So how did I calculate these prices? Of course, using TurkStat data. TurkStat does not announce item prices, but it announces a series of data that can be used to arrive at these prices. Some of the data I had in my archive.
Two basic data…
In order to find out which prices were used to calculate the CPI for which items in June, two basic data are needed:
First, you need to know the price on a certain date. I have taken April 2022 as the date when TurkStat announced prices for the last time.
The second data needed is how much item prices increased in the period after April 2022.
At this stage, it is very easy to make calculations for some items, while for others it is necessary to use approximate rates.
TurkStat does not announce price changes on an item-by-item basis except for some items. Therefore, for some goods and services, it is necessary to start from the group-based change.
Let me give a few examples…
In the CPI item basket, 01 refers to the food and non-alcoholic beverages group. 01171 includes vegetables in this group. There are about twenty products in this group. (I do not give the exact number, because the number changes according to the season.) TurkStat announces the price change of 01171 on a 5-group basis. In this group, the price increase between April 2022 and June 2024 was 54.84 percent. Whether 54.84 percent increase in more than two years is true or not is another issue.
Here is what I did yesterday: I know the April 2022 price of the vegetables in 01171. I increased this price by 54.84 percent to reach the June 2024 price. As I mentioned in yesterday’s article, some of the products in the group increased by 60 percent, and some increased by 45 percent; we do not know that detail, but the average increase is 54.84 percent.
Those whose prices can be easily calculated…
I mentioned that it is very easy to calculate the price of some items, as those items are announced as a single item, not as a group.
The specialist doctor’s examination fee, which drew the most attention in yesterday’s article, is also an amount that can be easily calculated in this way. In the official data of TurkStat, this wage is TRY 28 for April 2022. I add the 19 percent increase to this amount, resulting in TRY 34 for June this year. How can TRY 34 be wrong? In this calculation, I use simple logic and only a percentage operation.
Of course, TRY 34 for a specialist doctor’s examination fee is beyond logic, I am aware of that.
But TurkStat announced TRY 28 for April 2022! TurkStat also announced that the increase in this service from April 2022 to June 2024 is 19 percent! What I do is a very simple process… I increase TRY 28 by 19 percent and get TRY 34.
Those who say that this calculation cannot be done like this!
I calculated and wrote the prices of 100 items of goods and services in the CPI, some of which (doctor’s fees) are exact and some of which (vegetables) are approximate since they are announced on a group basis.
Some people tried to tug my article left and right. What, this is not how inflation is calculated, this is not how prices are determined, blah blah blah…
But I do not calculate inflation, I have no such intention. I am trying to pull back the curtain on prices that are kept like a state secret.
I am sure you know better how to make this calculation. No one is holding your hand, so go ahead!
