Inflation severely affects the Turkish people
Istanbul Market stall owner Kadriye Dogru makes do with stale sesame-coated bread, known as simit, for lunch these days. The widow, a mother of two, says she goes without lunch so she can put food on the table for her family later in the day.
The money the 59-year-old earns by selling gym shorts and other clothes at Ortakcilar Market in Istanbul no longer lasts, and she struggles to buy food, let alone anything else.
I have never experienced such an unfortunate life before. I go to sleep, I wake up and the prices go up. I bought a 5-liter can of (cooking) oil, its price was 40 liras. I came back, it was 80 lira.” “We don’t deserve this as a nation.”
Many people in Turkey are facing increasing hardship with the rising prices of food and other goods. As rising consumer prices affect countries around the world as they recover from the coronavirus pandemic, economists say Turkey’s staggering inflation has been exacerbated by economic mismanagement, concerns about the country’s financial reserves and President Recep Tayyip Erdogan’s pressure to cut interest rates.
He claims lower borrowing costs will boost growth, although economists say the opposite is the way to tame higher prices. The Turkish lira plunges to record lows against the US dollar, as the country’s central bank cut interest rates, raising concerns about its independence.
Stuck in the middle are the Turks trying to make ends meet.
“Everything is so expensive, I can’t buy anything,” said Soheila Poyraz, browsing the food stalls at Ortakcilar Market in Istanbul’s Eyup Sultan 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 are voting for you to make things right, why don’t you step in? Why don’t you stop the price hike? ‘ Poyraz said.
High inflation has damaged the popularity of Erdogan, whose early years in power were marked by a robust economy. Opinion polls indicate that the coalition of opposition parties that formed a bloc against Erdogan’s ruling party and its nationalist allies is rapidly closing the gap.
The Turkish government says inflation rose nearly 20% in October from the previous year, but an independent inflation research group, made up of academics and former government officials, put it close to a staggering 50%. By comparison, prices in the United States are up about 6% from last year – the most since 1990 – and inflation in the 19 European Union countries that use the euro has exceeded 4%, the highest rate in 13 years.
As a result, the Turkish currency hit an all-time low of 10 against the US dollar last week and lost about 25% of its value since the beginning of the year. This causes prices to rise, making imports, fuel, and everyday goods more expensive. While some argue that a weaker lira makes Turkish exporters more competitive in the global economy, much of Turkey’s industry depends on imported raw materials.
Erdogan has raised concerns about his influence on monetary policy, appointing four central bank governors since 2019 and expelling bankers who reportedly resisted interest rate cuts. The bank has raised interest rates by 3 percentage points since September and will make its final decision on Thursday.
In turn, central banks in other countries affected by the epidemic have raised interest rates or are considering doing so in the coming months, as subsidies at ports and factories, labor shortages and high energy costs drive prices up.
Foreign investors were dumping Turkish assets, and Turks transferred their savings into foreign currencies and gold.
“There was a massive sell-off in the financial markets just because of this interference with the independence of the central bank,” said Ozlem Derici Cengol, an economist and co-founder of Istanbul-based Spinn Consulting. “There are many factors that drive 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”.
Meanwhile, Erdogan 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 US. Thank God, we continue to be plentiful and plentiful.
His government blamed exorbitant food prices on supermarket chains and ordered an investigation that led to fines. He also ordered agricultural cooperatives to open 1,000 new stores across the country in an effort to keep food prices low.
Earlier, a group of students sleeping outdoors in parks to protest rising housing prices and dormitories was accused of “terrorism”. Meanwhile, rents have skyrocketed and home sales prices, which are mostly pegged to the dollar, are increasing.
In an effort to ease the suffering, Labor and Social Security Minister Vedat Bilgin said this month that the government was working to amend the minimum wage to protect workers from price hikes.
“We are working to remove the minimum wage issue from the agenda – I can already say it will provide relief,” he said.
Economists say this is not enough.
“Inflation, low income 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,” Sengul said.
Musa Timur, who owns a grocery store in Istanbul, said the high prices make it difficult for him to replace products.
“Any product we sell – we can’t get it at the same prices,” he said.
He said his customers are no longer able to buy a variety of food and mostly buy bread, pasta and eggs.
Fraser reported from Ankara, Turkey. Associated Press reporters Zeynep Bilginsoy and Ice Fitting contributed to Istanbul.
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