Turkey: inflation is out of control. Might this help the opposition?
Turkey is drowning in inflation, with many observers saying that the process is already entirely out of control.
The issue features prominently in the debates for the country’s upcoming municipal polls that will take place on 31 March, and the opposition has been quick to draw the public’s attention to the problem.
Is this just a political game, or a hint that change is set to come to Turkey?
Turkey has become a global leader in terms of inflation: the price increase has already affected almost all basic foodstuffs and caused a serious crisis in society.
“What did they promise us? That inflation will fall to a single figure. That it will reach the level of 2004. The public is in turmoil,” said Kemal Kilicdaroglu, the leader of the main opposition, the Republican People’s Party.
A report issued by the Statistics Committee of Turkey shows that consumer prices in the country increased by 1.06 per cent in January 2019 compared to the previous month. Compared to the same period last year, they’ve raised by 20.35 per cent.
The prices for food and non-alcoholic beverages rose the most – by 6.43%.
Sabotage or incompetence of the authorities?
The opposition links inflation with the incompetence of the ruling Justice and Development Party (AKP). However, the authorities deny that there is inflation in the country and say that price increases for foodstuffs is due to ‘sabotage’.
Representatives of the ruling party say that entrepreneurial businessmen are selling agricultural products purchased from farmers at exorbitant prices with two goals: to earn an unjustified income, and to discredit the authorities in the eyes of the people before the elections.
In order to prevent a crisis during the pre-election period and to enlist the support of the people again, the government, on the instructions of President Recep Tayyip Erdogan, is taking certain measures. One of them was the organization of regulated sale centres.
What are ‘regulated sale centres?’
Most of the centres, in which fruits and vegetables are sold much cheaper than in markets, are located mainly in Ankara and Istanbul. Erdogan also announced the opening of other centres in all 81 provinces of the country.
“Only chain stores are unhappy with these centres. They sell products purchased from farmers at 2-3 lira [$0.4 – 0.6] for 8-10 lira [$1.5-1.9]. We agreed with the municipalities representing our party and opened regulated sale centres – prices then fell by half,” the president said.
“Merchants are not scapegoats”
This approach has, however, outraged businessmen.
“We are not scapegoats. We are workers who work 20 hours a day, seven days a week. Merchants are being depicted as bad guys, while they are really the solution. This is nothing but the deception of the people,” said the head of the Union of Fruit and Vegetable Sellers of the Soke district, Umit Cosgun.
Cosgun says it is time for merchants in the markets of Ankara to create an organized structure in order to protect themselves.
Limit – one kilogram for cheap goods
Following the opening of the regulated trading centres, some chainstores also lowered their prices. However, cheap products are sold in a limited amount.
In early February 2019, it was only possible to buy up to three kilograms of fruits and vegetables in the regulated sale centres. But by the end of February, this limit decreased to 1 kilogram for potatoes, onions and tomatoes, which are sold there at prices below market value.
Because of these limits, people travel to these centres every day and stand there in long lines for hours.
Opposition leader Kemal Kilicdaroglu called the idea of creating centres selling produce at regulated prices a “mockery of citizens” and said that inflation can only be overcome by developing the economy.
Another guilty party – the dollar
DW Turkey said that the main reason for the price increase is the dependence of Turkish agriculture on the foreign market.
The logic is as follows:
Turkey imports fuel, electricity, fertilizers, grain and corn fodder. If the exchange rate of the dollar changes then the prices of all imported goods increase. The costs for farmers also grow accordingly.
In response, the authorities reduce import taxes, and sometimes even eliminate them.
But most experts say that it is impossible to solve the problem of price increases in this fashion.
What do international organizations say?
Ayshegul Selishik, Deputy Representative of the Food and Agriculture Organization of the United Nations in Turkey, believes that one of the main problems of the agricultural sector in Turkey is the weakness of food producers.
Selishik agrees that the prices for agricultural products going from farmers to the counters in the markets are too expensive and increasing unnecessarily. But in her opinion, the difference between procurement prices and selling prices should be regulated by the natural process of development, and not by the artificial regulation by the state.
Turkey has all the necessary legal framework for the development of agriculture, said Selishik, adding that all that is needed is for small-scale farmers to be given support from the state and give them direct access to the markets. In this manner, prices will be settled by themselves.
What do experts say
The rising prices and the emergence of regulated trade centres as a way to prevent the phenomenon are actively being discussed on Turkish social media.
The former chairman of the Liberal Democratic Party, Jem Toker, compared on his Twitter account the process of price regulation with communism:
“If it works out, the producers who pay taxes and sell the goods for income will disappear. And then cheap, but limited products will not be an alternative, but a necessary measure.”
Well-known economic expert Ozgur Demirtas wrote in his Twitter feed:
“The state attempting an intervention to stop inflation is like an attempt to treat a leg fracture with painkillers.”