Sun Sentinel Palm Beach Edition
Turkish people slammed by inflation, mismanagement
ISTANBUL — Marketstand owner Kadriye Dogru makes do with stale, sesame-covered 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 table for her family later in the day.
The money that the 59-year-old earns by selling garments at Istanbul’s Ortakcilar market no longer lasts, and she is struggling to buy food, let alone anything else.
“I go to sleep, I wake up, and the prices have gone up, she said. “We don’t deserve this as a nation.”
Many in Turkey are facing increased hardship as prices of food and other goods have soared. While rising consumer prices are affecting countries worldwide as they bounce back from the coronavirus pandemic, economists say Turkey’s eye-popping inflation has been exacerbated by economic mismanagement, concerns over the country’s financial reserves and President Recep Tayyip Erdogan’s push to cut interest rates.
He claims lower borrowing costs will boost growth, though economists say the opposite is the way to tame soaring prices. The Turkish lira has been tumbling to record lows against the U.S. dollar as the country’s central bank has slashed interest rates, fueling concerns about its independence.
High inflation has been hurting the popularity of Erdogan, whose early years in power were marked by a strong economy. Opinion surveys indicate that an alliance of opposition parties that have formed a bloc against Erdogan’s ruling party and its nationalist allies are fast narrowing the gap.
The Turkish government says inflation rose nearly 20% in October compared with a year earlier, but the independent Inflation Research Group, made up of academics and former government officials, put it close to 50%. In comparison, U.S. prices rose about 6% from a year ago — the most since 1990 — and inflation in the 19 European Union countries that use the euro exceeded 4%, the highest in 13 years.
Turkey’s currency, as a result, hit an all-time low of 10 against the U.S. dollar last week and has lost some 25% of its value since the start of the year. That is driving prices higher, 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 relies on imported raw materials.
There are concerns about Erdogan’s influence over monetary policy. He’s appointed four central bank governors since 2019 and fired bankers who are said to have resisted lowering interest rates. The bank has increased rates by 3 percentage points since September and is scheduled to release its latest decision Thursday.
In contrast, central banks in other pandemic-hit countries have been raising rates or considering doing so in the months ahead as backups at ports and factories, labor shortages and soaring energy costs have pushed up prices.
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 to God, we are continuing with plentitude and abundance,” he has said.
His government has blamed exorbitant food prices on supermarket chains and ordered an investigation that has resulted in fines. He also has ordered agricultural cooperatives to open 1,000 new shops across the country.
Earlier, he accused a group of students who slept outdoors in parks to protest high housing and dormitory prices of “terrorism.” Meanwhile, rents have skyrocketed and home prices, mostly pegged on the dollar, are increasing.
In a bid to alleviate suffering, Labor and Social Security Minister Vedat Bilgin said this month that the government was working to adjust the minimum wage to protect workers against rising prices.