Inflation hits Turks hard – .

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Inflation hits Turks hard – .


ISTANBUL (AP) – Kadriye Dogru, owner of the market stall, is content with stale sesame-covered bagels, known as simit, for lunch these days. The widow, a mother of two, says she skips lunch so she can put food on her family’s table later in the day.

The money the 59-year-old woman earns from selling sweatpants and other clothes at Istanbul’s Ortakcilar market is no longer lasting and she is struggling to buy food, let alone anything else. other.

“I had never known such a deplorable life. I fall asleep, I wake up and the prices have gone up. I bought a 5 liter can of (cooking) oil, it was 40 lire. I went back, it was 80 lire, ”she said. “We don’t deserve this as a nation. “

Many people in Turkey face increased difficulties as the prices of food and other commodities have skyrocketed. As rising consumer prices affect countries around the world as they recover from the coronavirus pandemic, economists say Turkey’s dramatic inflation has been exacerbated by economic mismanagement, concerns about the country’s financial reserves and pressure from President Recep Tayyip Erdogan to cut interest rates.

He says lower borrowing costs will boost growth, although economists say the opposite is the way to contain soaring prices. The Turkish lira has fallen to record levels against the US dollar as the country’s central bank cut interest rates, fueling concerns about its independence.

Caught in the middle, everyday Turks are trying to make ends meet.

“Everything is so expensive that I can’t buy anything,” Suheyla Poyraz said as she browsed the food stalls at Ortakcilar Market in Istanbul’s Eyupsultan district.

The 57-year-old housewife voted for Erdogan’s party and called on the government to act to end inflation.

“If you are the government and if we vote for you to fix things, why don’t you step in? Why don’t you stop the price increase? Poyraz said.

High inflation took a toll on Erdogan’s popularity, whose early years in office were marked by a strong economy. Opinion polls indicate that an alliance of opposition parties that have formed a bloc against Erdogan’s ruling party and its nationalist allies is quickly closing the gap.

The Turkish government says inflation rose nearly 20% in October from the previous year, but the independent inflation research group, made up of academics and former government officials, said it estimated at nearly 50%. In comparison, US prices rose about 6% for a year – the highest since 1990 – and inflation in the 19 countries of the European Union who use the euro exceeded 4%, the highest in 13 years.

As a result, the Turkish currency hit an all-time low of 10 against the US dollar last week and has lost around 25% of its value since the start of the year. This pushes up prices, making imports, fuel and consumer goods more expensive. While some argue that a weaker pound makes Turkish exporters more competitive in the global economy, much of Turkey’s industry relies on imported raw materials.

Erdogan’s influence on monetary policy is cause for concern. He has appointed four central bank governors since 2019 and fired bankers who allegedly resisted the interest rate cut. The bank has cut rates by 3 percentage points since September and will release its latest decision on Thursday.

In contrast, central banks in other countries affected by the pandemic have raised rates or plan to do so in the coming months as port reinforcements. and factories, labor shortages and skyrocketing energy costs have driven up prices.

Foreign investors got rid of Turkish assets and Turks converted their savings into foreign currencies and gold.

“There was a massive sell-off in the financial markets just because of this central bank independence intervention,” said Ozlem Derici Sengul, economist and founding partner of Istanbul-based Spinn Consulting. “There are several factors that move both inflation and financial market prices… (but) the dominant factor is central bank policy. “

She estimates that more than half of the population “is struggling in terms of income”.

Erdogan, meanwhile, insists the economy is strong and the country is emerging from the pandemic in better shape than others.

“The shelves in Europe are empty, they are empty in the United States. Praise be to God, we continue with abundance and abundance, ”he said.

His government blamed the sky-high food prices on supermarket chains and ordered an investigation that resulted in fines. He also ordered agricultural cooperatives to open a thousand new stores across the country in an attempt to keep food prices low.

Previously, he had accused a group of students who slept outside in parks to protest against the high prices of housing and dormitories of “terrorism”. Meanwhile, rents have skyrocketed and home sales prices, mostly pegged to the dollar, are rising.

In a bid to alleviate suffering, Labor and Social Security Minister Vedat Bilgin said this month that the government was working to adjust the minimum wage to protect workers against rising prices.

“We are working to get the minimum wage issue off the agenda – I can already say that will bring relief,” he said.

Economists say that is not enough.

“Inflation, low incomes and unequal income distribution will have more side effects in 2022 and 2023 if the government continues to insist on low interest rates, loose monetary policy and election preparations,” he said. Sengul said.

Musa Timur, who owns a grocery store in Istanbul, said rising prices made it difficult for him to switch products.

“Any product that we sell – we can’t buy them at the same prices,” he said.

He said his customers could no longer afford a variety of foods and mainly bought bread, pasta and eggs.

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Fraser reported from Ankara, Turkey. Associated Press journalists Zeynep Bilginsoy and Ayse Wieting in Istanbul contributed.

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This story was first published on November 16, 2021. It was updated on November 17, 2021, to correct the fact that Turkey’s central bank has cut interest rates by 3 percentage points since September, and not increased them.

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