The Kapali Carsi

On Turkish inflation, becoming a traitor and other demons…

I am going to share my latest column, on Turkish inflation, but before that, I wanted to summarize my month away from blogging, which was quite interesting, to say the least…

In my Friday Hurriyet Daily News (HDN) column on March 6, I argued that, thanks to Primident (Prime Minister and President) Supreme Leader Recep Tayyip Erdogan’s tirades against the Central Bank of Turkey, the country was approaching a crisis. The next day, pro-government “newspaper” Sabah published an anonymous article accusing me of being a traitor and enemy of Turkey. I am not sharing the hyperlink (it is in Turkish anyway), but Gulenist Today’s Zaman summarized their accusations in a short article a couple of days later. Around the same time, one of the columnists at their “English”-language daily Daily Sabah (not much imagination there) featured me, albeit without giving my name.

What did I do? Well, nothing. Originally, I was planning to sue Sabah (but not Daily Sabah, as that “op-ed” did not feature any insults), and I would have probably eventually won if I had. But after consulting with the editorial team at HDN as well as Turkish and foreign journalists and columnists who had similarly “graced” Sabah’s pages in the past, I decided that the best answer would be to ignore them- except that I did not do that. I gave them the proper answer in my next HDN column🙂

That was the most important development of the last few week. Oh and the weight-loss mechanism I had outlined in my last column of 2014 is working really well. As of today (April 5), I am down to 81 kg (178 lb)- from 95 kg (210 lb) on January 12, when I officially kicked off my New Year’s Resolution. I guess the possibility of giving money to Galatasaray and/or AKP/Erdogan was motivation enough:)

Anyway, I may share a couple of time-insensitive columns from the past few weeks during the next few days, but before I finally move on to today’s column, I need to make an announcement: I have another travel week ahead before I go Washington D.C. next week for the IMF-World Bank meetings. I am in Istanbul on Tuesday, Ankara Wednesday and Thursday. While those days are reserved for personal business and private meetings, I am speaking on two public events on Friday: First, in the morning, I will be at the Koç University | TÜSİAD Economic Research Forum conference on inflation dynamics in Turkey, where I will be one of panelists. Then, in the evening, I will be at a TED-inspired event, where I will be speaking on the Turkish economy for 20 minutes: No notes, graphs, etc.- should be fun. Both events are free and open to the public, so feel free to drop by if you have nothing else to do:)- the hyperlinks have registration info.

Having done with the spring cleaning, I can move on to today’s column: Here is the intro:

My friend and unofficial editor Esther, who was taken from her family and friends exactly a year ago, was half Jewish.  I would like to remember her, while at the same time celebrate Passover and Easter, by carrying an old tradition to my column.

Jews commemorate their exodus from Egypt at Seder, which marks the beginning of Passover. During the dinner, which was possibly Jesus’ Last Supper, the youngest child at the table asks four questions about why this night is different from others. Being a kid at heart, I will ask and answer four questions on March inflation, which was released on April 3.

And I do exactly that in the column, which you can read, as always, at the HDN website. For once, I do not have much to add to the column. I just need to make three small points on why the inflation outlook is still dismal:

First, even though it has been only three months to the year, year-to-date inflation is at 3 percent. Soooooo, there is not much room left for prices to go up if the Bank is serious about its 5 percent target. But as everybody knows, it isn’t:) In fact, I expect their end-year forecast to be revised up in the Bank’s next Inflation Report, which will be published at the end of the month, on April 30.

Second, it is true that core inflation is falling, as I mention in the column as well,  but traditionally, it has been low during the first quarter, picking up later on. I know this is not too scientific, but I could tell you as a former market economist that looking at historical patterns sometimes works as well as, if not better than, metrics for Turkish inflation. So I would not be surprised if the core does not fall as much as expected.

And finally, from seasonally-adjusted monthly data, it seems that the fall in core inflation seems to have come to a halt already, probably because of the exchange rate weakness, and despite the really weak economy I outlined in my previous HDN column. I would not make too much of one month of data, especially since monthly core inflation has had ups and downs regularly of late, but I’ll just be watching the data for the next couple of months…

That’s all folks. Hope to see at one of the two events on Friday…

2 Responses to “On Turkish inflation, becoming a traitor and other demons…”

emmuserApril 6th, 2015 at 6:45 am

Emre, I haven't had the pleasure of reading one of your posts in a while. I suppose the fact that you've been labeled by a traitor highlights the disturbing political climate at the moment (and the popularity of your columns). I wonder when foreign investors will wake up….so far, they seem pretty complacent in the face of a completely unpredictable, authoritarian-like regime.