Consumer price inflation in July was announced as 9.49%. Thus, annual inflation increased by 9.62% to 47.83%. Producer prices also rose 8.23% in July. Economists indicate that the acceleration in consumer prices will continue in the coming months. Altınbaş University Faculty of Business Faculty Member, Economist Prof. Dr. Hayri Kozanoğlu mentioned that an interesting picture emerged for July inflation. “The common opinion of the public is that TUIK has reduced the data to single digits in order not to give a double-digit inflation outlook on a monthly basis. However, if a rate of 10% or less had been announced, a positive perception would have emerged that more realistic statistics were shared with the staff change in the economy management. A 10% one-month increase would bring annual inflation to 48.5%.” made its assessment. The Central Bank's 2023 inflation forecast is 58%. According to Kozanoğlu, however, in the forecast graph in the Inflation Report, it is predicted that inflation will decrease after it approaches the 70% limit at the beginning of 2024. “According to our calculations, 5.4% monthly inflation in the remaining 5 months of the year will bring annual inflation to 70%, which is highly likely.” said.
He pointed to the fall for inflation.
Kozanoğlu stated that the spending groups whose prices increased the least in July were education with 2.67%, clothing and shoes with 3.19%, and housing with 6.03%. Reminding that seasonal price adjustments were made in all three items, and price adjustments were made especially in September when schools opened, he said that inflation will go out with the fall. He pointed out that the price of natural gas, whose price was reset before the election, will increase inflation until the end of 2023, according to the Central Bank. He noted that the basket rate, which has jumped around 35%, will also put pressure on inflation in the coming months with the permeability effect. Emphasizing that the effect of the minimum wage increase on inflation was calculated in the range of 2.7-4.1%, he predicted that inflation would continue to increase at a gallop.
“The legend that vegetables and fruits are cheap in summer is a thing of the past”
Kozanoğlu also mentioned that low-income citizens said that the announced inflation figures do not reflect the inflation they face. He emphasized that they allocate 35% of their income to food and 30% to rent. According to the official statistics of TUIK and the Central Bank, unprocessed food prices increased by 9.51% monthly and increased by 79.71% annually. In fresh fruits and vegetables, this increase was 17.65% in July, and 76.53% annually. So, the legend that vegetables and fruits are cheap in the summer is also a thing of the past. Even bread, the staple food of the poor, has skyrocketed by 14.40% in a month.” said.
“The increase in drug prices is 15.93% monthly”
Drawing attention to the monthly increase of 15.93% in drug prices, which is especially important for mature citizens, Kozanoğlu stated that this increase will reach 30% in the next month, since drug hikes are made in the middle of the month. Rental increases were 7.67% in July and 81.69% year-on-year. In addition, reset natural gas prices will gradually increase inflation by 2.38% until the end of 2023.
“When will inflation slow down?”
Comparing the Central Bank's inflation forecast of 58% with the policy rate of 17.5%, Kozanoğlu said, "With a simple calculation, we can find that the real interest rate will be 40.5. A somewhat detailed calculation takes us to 43.5% expected inflation and -26% real interest rate, considering the remaining 5 months of the year and the first 7 months of 2024, where 33% inflation is expected.” made the statement. He stated that the deceleration of inflation was only possible with the effect of tightening in credit cards and personal loans. He said that this means a decrease in demand, poorer income of the low-income people whose income is not enough to meet their expenses, and an increase in unemployment. He predicted that such a situation would lead the country to a scenario of inflation, that is, “stagflation” in recession.
