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Monday, March 20, 2023

Inflation Hits Turkish People Hard

Kadriye Dogru, the proprietor of a market kiosk, eats stale, sesame-covered bagels known as simit for lunch these days. The widowed mother of two claims that she skips lunch so that she can feed her family later in the day.

The 59-year-earnings old’s from selling sweatpants and other items at Istanbul’s Ortakcilar market are no longer sufficient, and she is unable to buy food, much alone anything else.

“I had never known such a miserable existence. I go to sleep, and when I wake up, the costs have increased. I paid 40 lira for a 5-litre can of (cooking) oil. “When I returned, it was 80 lira,” she explained. “As a country, we don’t deserve this.”

Many individuals in Turkey are suffering as food and other items costs have risen dramatically. While rising consumer prices are affecting countries around the world as they recover from the coronavirus outbreak, economists say Turkey’s astronomical inflation has been exacerbated by economic mismanagement, concerns about the country’s financial reserves, and President Recep Tayyip Erdogan’s push to cut interest rates.

He contends that reducing borrowing costs will stimulate GDP, despite experts arguing that the reverse is true. The Turkish lira has been plunging to new lows against the US dollar after the country’s central bank lowered interest rates, raising fears about the country’s independence.

Everyday Turks struggling to make ends meet are caught in the middle.

Suheyla Poyraz stated as she explored the food stalls at the Ortakcilar market in Istanbul’s Eyupsultan district, “Everything is so costly, I can’t purchase anything.”

The 57-year-old housewife supported Erdogan’s party and urged the government to take action to combat inflation.

“Why aren’t you interfering if you’re the government and we’ve voted for you to make things right?” Why aren’t you putting a halt to the price hikes?” Poyraz remarked.

Erdogan’s popularity has suffered as a result of high inflation, despite the fact that his early years in office were distinguished by a thriving economy. Opinion polls show that a coalition of opposition parties working against Erdogan’s ruling party and its nationalist allies is rapidly closing the gap.

The Turkish government claims that inflation increased by about 20% in October compared to the same month a year ago, but the independent Inflation Research Group, comprised of academics and former government officials, estimates that it increased by nearly 50%. In comparison, prices in the United States increased by almost 6% from a year earlier, the greatest rate since 1990, while inflation in the 19 European Union nations that use the euro topped 4%, the highest level in 13 years.

As a result, Turkey’s currency fell to an all-time low of 10 versus the US dollar last week, losing over 25% of its value since the beginning of the year. As a result, imports, petrol, and basic necessities are becoming more costly. While some claim that a lower currency makes Turkish exporters more competitive in the global market, most of Turkey’s manufacturing is reliant on imported raw materials.

Erdogan has aroused worries about his monetary policy influence by choosing four central bank governors since 2019 and removing bankers who are alleged to have opposed interest rate cuts. Since September, the bank has raised rates by three percentage points, and it will announce its latest decision on Thursday.

Central banks in other pandemic-affected nations, on the other hand, have begun boosting rates or are considering doing so in the coming months as a result of backlogs at ports and industries, labor shortages, and rising energy costs.

Turkish assets have been dumped by international investors, and Turkish funds have been converted to foreign currencies and gold.

“Just because of this meddling in the central bank’s independence, there has been a major selloff in financial markets,” said Ozlem Derici Sengul, an economist and founding partner of Istanbul-based Spinn Consulting. “Several variables influence both inflation and financial market pricing… but the central bank’s policy is the most important.”

She thinks that more than half of the population “is experiencing financial hardship.”

Meanwhile, Erdogan maintains that the economy is solid and that Turkey is faring better than other countries in the aftermath of the epidemic.

“European shelves are empty, and American shelves are empty. Praise be to God, we are still experiencing plenty and abundance,” he remarked.

His administration has accused grocery chains for high food costs, and has authorized a probe that has resulted in fines. In order to keep food costs low, he has also ordered agricultural cooperatives to build a thousand new shops around the country.

He had previously accused a group of students of “terrorism” for sleeping in parks to protest exorbitant housing and dormitory expenses. Meanwhile, rentals have soared, and property sales prices, which are mostly based on the dollar, are rising.

Labor and Social Security Minister Vedat Bilgin stated this month that the government was trying to modify the minimum wage to safeguard employees from rising prices in an effort to alleviate hardship.

“We’re striving to get the minimum wage issue off the table – I can already tell you that it’ll be a relief,” he remarked.

Economists argue that it is insufficient.

“If the government continues to insist on low interest rates, lax monetary policy, and election preparations, inflation, low income, and uneven income distribution will have greater negative consequences in 2022 and 2023,” Sengul warned.

Musa Timur, the owner of an Istanbul food store, claimed that growing costs made it difficult for him to replace items.

“We can’t get any of the products we offer in at the same pricing,” he added.

He claims that his consumers can no longer afford a wide range of foods and instead buy bread, spaghetti, and eggs.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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