Turks stockpile rice and baby food to shield from surging inflation
Consumers in Turkey are stocking up on rice, pasta and baby food to protect themselves and their families from the impact of inflation, which is in double digits and accelerating.
Food has become so expensive in Turkey that some people fear that they will struggle to afford some basic goods in the months ahead, Reuters said on Friday.
“We are buying only the absolute necessary and cheapest brands out there,” said Hüseyin Duran, an Istanbul-based father of three and a security guard who is receiving government money because his working hours have been cut.
“All food prices are rising but especially baby formulas,” he said. “I worry about my kids. We can only meet our rent, groceries and loan payments.”
Turkey stands out in a world where the economic fallout from the COVID-19 pandemic has heralded near-zero rates of inflation. Prices are rising at an annual 14.6 percent, according to official data. Other estimates say inflation is far higher.
Inflation has been driven by a slump in the value of the lira. It fell by 20 percent last year, even after the central bank more than doubled interest rates to 17 percent. Those higher rates are now putting pressure on household finances, with many people no longer able to afford to take out a loan.
President Recep Tayyip Erdoğan’s economic policies are largely to blame for the slump in the lira’s value. His government ordered state-run banks to engineer a borrowing boom in 2020. A compliant central bank kept interest rates at below inflation until late in the year, driving up demand for imports and widening the country’s current account deficit.
The slide in the lira prompted many Turks to exchange their savings for dollars and euros, adding to the currency’s woes and stoking more inflation. Now Erdoğan has accepted higher interest rates and installed a new central bank chief to oversee tighter monetary policy.
Surveys show that kitchen shelves are thinning out. One policymaker told Reuters that the government expects inflation to be difficult in 2021 and it must be monitored.
Turkey is “mired in a painful stagflation” even during the coronavirus curfew and high borrowing costs, Yesenn El-Radhi, a senior credit analyst at Capital Intelligence Ratings, told Reuters.
“Inflationary pressures continue to be high due to the recent rise in global commodity prices and a lagged effect of the sharp lira depreciation,” he said.
“Every time I fill my pantry the shopping bags get lighter but the bill gets higher,” said Pınar, 31, who declined to provide her surname. “I buy in bulk so I don’t have to shop again for three or four months.”
Pınar is a furloughed chef who gets part of her salary under a temporary ban on companies firing workers. She says it only covers rent and utilities.
Inflation in Turkey was already picking up sharply before 2020. It jumped during a currency crisis in 2018 and only dipped into single figures briefly in 2019.
More than three quarters of Turkish people believe inflation is higher than official data, according to local research company Metropoll. More than half of respondents in a separate survey by the Deep Poverty Network conducted in Istanbul said they relied on food handouts from the municipality, according to Reuters.
“There had not been hunger in Turkey before. But hunger is the reality now,” said Kemal Kılıçdaroğlu, leader of the main opposition Republican People’s Party (CHP).
The government has already cut taxes on tobacco to help rein in inflation despite Erdoğan being a vocal opponent of smoking. State agencies could also adjust the price of electricity and natural gas to ease the financial burden on the population. Last month, the government increased the minimum wage by a net 16 percent for 2021. It now stands at a monthly 2,825 liras ($380).
“You cannot solve the food problem with interest rates,” Gizem Öztok Altınsaç, chief economist at Turkey’s top business organisation TÜSİAD, told a conference last week, Reuters said.
“Our problem with inflation is too big so we have to take more targeted steps to solve it.”