Türkiye’s high inflation may cool down but cost-of-living crisis not

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Xinhua News

25th November 2022 – (Ankara) Türkiye’s rampant inflation is expected to cool down in December but the country’s worst-ever cost-of-living crisis in decades would stay on, experts said.

“We have seen the possible peak in inflation in October, and inflation is due to cool down,” Enver Erkan, chief economist at Istanbul’s Tera brokerage house, told Xinhua.

“This decrease in inflation will not however make price increases disappear. Prices will increase in a lesser amount compared to serious price hikes of last year,” he said.

According to Erkan, the purchasing power of citizens, decimated by significant price increases in essential goods over the past year, will likely not improve in 2023 despite large wage hikes for low-paid workers and pensioners expected in January.

Erhan Aslanoglu, an economics professor at Istanbul’s Piri Reis University, echoed Erkan’s remarks, saying a drop in inflation will not automatically improve the situation of households.

“We shouldn’t expect an improvement for most citizens. Essential goods will continue to stay expensive,” he said.

According to figures released by the Turkish Statistical Institute in early November, annual inflation for food, which makes up about a quarter of the consumer basket, was 99.1 percent while transport prices rose 117.2 percent annually.

The Turkish lira has weakened by more than 50 percent since September 2021 amid a policy of low-interest rates advocated by President Recep Tayyip Erdogan to boost growth and exports. The monetary policy has also fuelled a flight from the lira.

The Turkish leader, who is seeking another term in office in next year’s elections, has repeatedly defended his unconventional economic policies, promising that the country will “overcome” the inflation problem after the New Year.

Yet, Erkan warned that the inflation might stop going down in the second half of 2023 after a fall to the 40-45 percent band in the middle of the year.

In a shopping mall in Türkiye’s capital Ankara, consumers hope for ease in hardships but remain wary of such prospects.

“This inflation has had an awful effect on the family budget in the past year and I don’t expect prices to drop, to be honest. I would be happy if they don’t change for some time,” Aysenur Sayin, a mother of two, told Xinhua.

She said retailers are stocking goods to sell at higher prices in the New Year, a method denounced by the government.

Erdogan on Monday vowed stricter measures against shops and supermarkets that charge excessive prices for goods following a string of heavy fines slapped on some stores in the past months.

Turkish households have been battling with high energy, food, and housing costs since a currency meltdown in 2018.

The Russia-Ukraine conflict and the lira’s tumble have stoked inflation to a 24-year high of 85.5 percent in October after soaring for 17 consecutive months, according to official figures. 

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