TODAY’S – Minister offers to ‘rethink’ food in inflation calculations

Minister offers to ‘rethink’ food in inflation calculationsTurkey needs to rethink the share of food items in its consumer price calculations and perhaps “revise the calculation method in line with global market parameters,” a Turkish minister said on Wednesday, flaring criticisms that the authorities seek to justify a likely failure to achieve Turkey’s year-end inflation target of 5 percent.Food prices, which have the biggest bearing on headline inflation, have seen the largest annual rise of all categories so far this year The Turkish Statistics Institute’s (TurkStat)onsumer price index (CPI)alculation basket includes 432 goods, and food prices make up about a quarter of the basket.

“We need to rethink this [food’s share in the CPI basket] and analyze how others do this calculation,” Food, Agriculture and Livestock Minister Mehdi Eker told reporters on Wednesday in AnkaraOn the same day, Economy Minister Nihat Zeybeki said, “The inflation target will be realized one way or another markets should focus on interest rates.”The ministers’ statements add to earlier comments that the authorities are feeling the heat from this year’s unusual surge in food prices — which is partly due to unfavorable weather conditions — and that a revision in inflation targets is likely.

“Elevated food prices have been the main factor limiting the pace of decline in inflation,” the Central Bank of Turkey said in June, adding that if they are not able to reduce inflation, the target itself might need to be reconsidered.Statistics institutes around the world, including TurkStat, calculate inflation rates using an average consumption basket.

The distribution of the items in the consumption basket varies depending on the average income level of the households. Amid various subcategories, food prices remained the key driver of inflation in Turkey.

Currently, food represents 24.45 percent of TurkStat’s CPI basket.

The five subcategories ranked after food housing are represented by housing with 16.41 percent, transportation with 15.

54 percent, home appliances with 752 percent, ready-made clothing with 717 percent and restaurantshotels with 658 percent.The annualized consumer price index (CPI) for Turkey jumped to 932 percent in July, a level higher than expected, according to data Food prices remained the key driver of inflation, rising by 12.

56 percent year-on-year in July. This is the fourth consecutive month where annualized inflation remained above 9 percent, a factor that puts further pressure on the central bank in realizing its inflation target.

Commenting on the issue, Turkish Union of Agricultural Chambers (TZOB) President Iemsi Bayraktar said on Thursday that food producers and farmers cannot be held responsible for surging inflation. “Agricultural producers had to sell their products at prices below market value in June and July.

everybody is aware of production costs, and farmers want to see price stability in the markets,” he said in a written statement.

SOURCE: Today’s Zaman