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Saturday, January 22, 2022

“We don’t deserve it”: inflation hits the Turks hard

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The owner of the Kadriye Dogru market kiosk makes do with stale, sesame-covered bagels, known as simit, for lunch these days. The widowed mother of two says she doesn’t go to lunch in order to put food on the table for her family later in the day.

The money the 59-year-old earns from selling sweatpants and other items to Istanbul s Ortakcilar market no longer lasts and she is struggling to buy food, let alone something else.

“I had never lived such a deplorable life. I go to sleep, I wake up and the prices have gone up, I bought a 5-liter can of oil (cooking), 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 are facing greater difficulties as the prices of food and other goods have soared. As rising consumer prices hit countries around the world as they recover from the coronavirus pandemic, economists say Turkey’s staggering inflation has been exacerbated by economic mismanagement, concerns over the country’s financial reserves and from President Recep Tayyip Erdogan’s push to cut interest rates.

He argues that lower borrowing costs will spur growth, even though economists say it’s just the opposite of the way to tame the price spike. The Turkish the lira tumbled to historic lows against the US dollar as the country’s central bank cut interest rates, fueling concerns about its independence.

In between are everyday Turks trying to make ends meet.

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

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

“If you are the government and if we vote for you to make things right, why don’t you intervene? Why don’t you stop the price increase? ”Said Poyraz.

High inflation hurt Erdogan’s popularity ratings, whose early years in power were characterized 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 nearly closing the gap.

The Turkish government says inflation rose nearly 20% in October compared to a year earlier, but the independent inflation The research team, made up of academics and former government officials, got that close to an astonishing 50%. By comparison, prices in the United States have risen about 6% from a year ago – the highest since 1990 – and inflation in 19 European Union countries using the euro exceeded 4%, the highest in 13 years.

The Turkish currency, as a result, hit an all-time low of 10 against the US dollar last week and has lost around 25% of its value since the beginning of the year. This is driving up prices, 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 Turkish industry relies on imported raw materials.

Erdogan has expressed concern about his influence on monetary policy, appointing four central bank governors since 2019 and firing bankers who are said to have resisted the cut in interest rates. The bank has raised rates by 3 percentage points since September and will release its latest decision on Thursday.

Conversely, central banks in other countries affected by the pandemic have raised rates or considered doing so in the months to come, as backups in ports and factories, labor shortages and rising energy costs have driven up. prices.

Foreign investors dumped Turkish assets and the Turks converted their savings into foreign currencies and gold.

“There has been a massive sell-off in the financial markets precisely 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 drive both inflation and financial market prices … (but) the dominant factor is central bank policy.”

He estimates that more than half of the population “struggle in terms of income”.

Erdogan, meanwhile, insists the economy is strong and that 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 God, we continue with abundance and abundance, ”he said.

His government blamed supermarket chains for exorbitant food prices and ordered an investigation that led to fines. It also ordered agricultural cooperatives to open 1,000 new stores across the country in an effort to keep food prices low.

Earlier, he accused a group of students sleeping outdoors in parks as “terrorism” to protest the high prices of housing and dormitories. Meanwhile, rents have skyrocketed and prices for home sales, mostly pegged to the dollar, are on the rise.

In an effort to alleviate suffering, Labor and Social Security 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 minimum wage issue from the agenda – I can already say it will provide some relief,” he said.

Economists say it is not enough.

“Inflation, 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, expansionary monetary policies and election preparations,” Sengul said.

Musa Timur, owner of a grocery store in Istanbul, said that rising prices made it difficult for him to replace products.

“Whatever products we sell, we can’t get them at the same prices,” he said.

He said his customers can no longer afford a variety of food and mainly buy bread, pasta and eggs.

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

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