Analysis: Less for more in Turkey: expensive food hunger rebounds the economy | Instant News


ISTANBUL (Reuters) – Food has become so expensive in Turkey that some people are spending what they have on rice and pasta supplies to avoid swallowing higher prices in the coming months.

Women shopping at a local market in Istanbul, Turkey January 12, 2021. REUTERS / Murad Sezer

Parents have turned to discounts on baby biscuits, the cost of eggs nearly doubling in a year, and a mock photo circulating on Twitter where a man on his knees offers a woman a can of cooking oil instead of an engagement ring.

“We only buy the absolute necessary and cheapest brands out there. All food prices went up but especially infant formula, ”said Huseyin Duran, 43, a father of three from Istanbul and a security guard who received part of the state salary for losing his job.

“I’m worried about my children,” he said. “We can only cover our rent, groceries and loan payments.”

In a world with near-zero inflation and the economic collapse due to the coronavirus, Turkey stands out with annual consumer prices up 15%, second only to Argentina among emerging markets and the highest by far in the OECD.

Rising oil and fertilizer prices and dry weather are part of the reason food inflation soars by more than 20% a year. But economists also pointed to a government policy decision that saw the lira plunge to a record low last year, driving up import costs by about $ 9 billion for food.

Turkish President Tayyip Erdogan reluctantly accepts a sharp interest rate hike that will slow economic recovery right when the COVID-19 vaccine is launched.

With a survey showing kitchens running low, Erdogan may need to do more about the basic cost of living even after lifting the head of a new central bank that in November pledged to tame inflation.

A policymaker told Reuters the government expects inflation to be tough in 2021 and must be monitored.

Turkey is “mired in painful stagflation” even amid the curfew due to the coronavirus and high borrowing costs, said Yesenn El-Radhi, senior analyst at Capital Intelligence Ratings.

“Inflationary pressure continues to be high due to the recent increase in global commodity prices and the effects of the sharp depreciation of the lira,” he said.

LIGHTWEIGHT SHOPPING BAG

The trip to the market – where prices for eggplant, oranges and sunflower oil rose more than 50% last year – has become a serious burden for Turks besides the pandemic, which has stressed workers and incomes.

“Every time I fill the kitchen, the shopping bag gets lighter but the bill gets higher,” said Pinar, 31, who declined to give her last name. “I buy in bulk so I don’t have to shop again for three or four months.”

As a chef on leave, Pinar gets part of his salary under a temporary layoff ban which he says only covers rent and utilities. “I had many sleepless nights (and) in the end I thought I was going to be unemployed.”

Hyperinflation swept through Turkey in the 1990s and only ended with an International Monetary Fund program that tamed prices right when Erdogan came to power in 2003.

Inflation, led by food, surged again in the 2018 currency crisis and has remained mostly in double digits since. Economists blame chronic trade imbalances and the country’s costly FX interventions depleting reserves.

POLITICAL TEST

A Metropoll survey last month showed 80% believed inflation was higher than the official tally. A separate survey by the Deep Poverty Network showed more than half of respondents in Istanbul rely on food aid from the city government.

Kemal Kilicdaroglu, leader of the main opposition Republican People’s Party, said the situation was getting worse. “There has never been a hunger in Turkey before. But hunger is a reality now. “

In a turnaround, Erdogan said in November that a “bitter pill” of such high prices was needed to cool prices. Lutfi Elvan, his new finance minister, said he would take structural steps to fight inflation, which is expected to rise until April.

The government has several levers it can pull out to relieve pressure on the public. Ankara has cut tobacco taxes, which weigh heavily on the consumer price index (CPI), even as it raised alcohol and toll duties with less impact on headline numbers.

State agencies also set prices for utilities such as natural gas and electricity. Last month the government raised the net minimum wage by 16% for 2021, to 2,825 liras ($ 377) per month, to encourage workers but also to the overall CPI.

“You can’t solve the food problem with interest rates,” Gizem Oztok Altinsac, chief economist at Turkey’s top business organization TUSIAD, told a conference last week.

“Our problem with inflation is too big, so we have to take more appropriate steps to solve it.”

Additional reporting by Nevzat Devranoglu, Orhan Coskun and Murad Sezer; Edited by Toby Chopra

.



image source

to request modification Contact us at Here or [email protected]