Inflation is hitting Turkish people hard
ISTANBUL (AP) – Market stall owner Kadriye Dogru is content with stale, sesame-coated bagels, known as simit, for lunch these days. The widowed mother of two says she goes without lunch so she can put food on the family table later in the day.
The money that the 59-year-old earns from selling sweatpants and other garments on Istanbul’s Ortakcilar market no longer holds, and she struggles to buy food, let alone anything else.
‘I had never experienced such an unfortunate life. I go to bed, I wake up and the prices have gone up. I bought a 5-liter can of (cooking) oil, it was 40 lira. I went back, it was 80 lira, she said. “We do not deserve this as a nation.”[ads1];
Many people in Turkey are facing increasing difficulties as food and other commodity prices have risen. While rising consumer prices are affecting countries around the world as they return from the coronavirus pandemic, economists say Turkey’s conspicuous inflation has been exacerbated by economic mismanagement, concerns over the country’s financial reserves and President Recep Tayyip Erdogan’s pressure to cut interest rates.
He claims lower borrowing costs will increase growth, although economists say the opposite is the way to tame rising prices. The Turkish lira has fallen to record lows against the US dollar as the country’s central bank has cut interest rates, fueling concerns about independence.
Trapped in the middle are ordinary Turks trying to make ends meet.
“Everything is so expensive, I can not buy anything,” said Suheyla Poyraz as she surfed food stalls at the Ortakcilar market in Istanbul’s Eyupsultan district.
The 57-year-old homemaker has 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 do not you intervene? Why do not you stop the rising prices? ” in Poyraz.
High inflation has damaged Erdogan’s popularity ratings, whose first year in power was marked by a strong economy. Opinion polls suggest that an alliance of opposition parties that have formed a bloc against Erdogan’s ruling party and its nationalist allies is rapidly narrowing the gap.
The Turkish government says that inflation rose by almost 20% in October compared to the previous year, but the independent Inflation Research Group, which consists of academics and former government officials, estimates it is close to 50%. In comparison, US prices rose by around 6% from a year ago – the most since 1990 – and inflation in the 19 EU countries using the euro exceeded 4%, the highest in 13 years.
Turkey’s currency, as a result, reached a record low of 10 against the US dollar last week and has lost around 25% of its value since the beginning of the year. It raises prices and makes imports, fuel and groceries more expensive. While some argue that a weaker lira makes Turkish exporters more competitive in the global economy, much of Turkey’s industry is dependent on imported raw materials.
There is concern about Erdogan’s influence over monetary policy. He has appointed four central bank governors since 2019 and fired bankers who are said to have resisted lowering interest rates. The bank has lowered interest rates by 3 percentage points since September and will announce its latest decision on Thursday.
In contrast, central banks in other countries affected by the pandemic have raised interest rates or considered doing so in the coming months as backup in ports. and factories, labor shortages and sky-high energy costs has pushed up prices.
Foreign investors have dumped Turkish assets, and Turks have converted their savings into foreign currency and gold.
“There has been a massive sale in the financial markets just because of this intervention to the central bank’s independence,” said Ozlem Derici Sengul, an economist and founder of Istanbul-based Spinn Consulting. “There are several factors that move both inflation and financial market prices … (but) the dominant factor is the central bank’s policy.”
She estimates that more than half of the population is “struggling in terms of income.”
Erdogan, meanwhile, insists that the economy is strong and that the country is emerging from the pandemic in better shape than others.
“Shelves in Europe are empty, they are empty in the United States. Praise be to God, we continue in abundance and abundance,” he said.
His government has blamed exorbitant food prices on supermarket chains and ordered an investigation that has resulted in fines. He has also ordered agricultural cooperatives to open a thousand new stores across the country in an effort to keep food prices low.
He previously accused a group of students who slept outdoors in parks to protest against high housing and dormitory prices for “terrorism”. Meanwhile, rental prices have skyrocketed and home sales prices, mainly linked to the dollar, are rising.
In an effort to alleviate suffering, Labor and Social Affairs Minister Vedat Bilgin said this month that the government is working to adjust the minimum wage to protect workers from rising prices.
“We are working to remove the issue of minimum wage from the agenda – I can already say that it will provide relief,” he said.
Economists say that is not enough.
“Inflation and low income and uneven 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,” Sengul said.
Musa Timur, who owns a grocery store in Istanbul, said rising prices are making it difficult for him to replace products.
“All the products we sell – we can not get them in at the same prices,” he said.
He said his customers could no longer afford a variety of foods and mostly 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 that Turkey’s central bank has reduced interest rates by 3 percentage points since September, not increased them.
