Turkey’s battle with inflation: ‘prices change daily and everyone is scared’
From behind the counter at a bakery in Kasimpaa, a working-class neighborhood of Istanbul, Mustafa Kafdar can see the orange, white and blue banners of Recep Tayyip Erdoan’s Justice and Development Party (AKP) as they wave in the spring breeze fly.
Kafadar is out of retirement from Turkey’s economic crisis – his pension is no longer enough to cover his basic expenses. He now works shifts at the bakery, where he describes living from pay-day to pay-day while he cleans crumbs from a tray.
“Everything is too expensive. When I buy my essentials and pay my bills, there is nothing left,” he says.
When asked who is responsible, he says with a smile. “You know who makes inflation high,” he says secretly, reluctant to express his opinion about Erdoan’s economic policies directly. “Not me, not you, nobody on the street – but who?” Kafdar has requested that his name be changed for his safety.
Turkey is facing an unprecedented financial crisis. After the lira lost half its value last year alone, the country is now battling rocket inflation, officially 61.14%.
Kaftar arranges rows of delicate breakfast pastries – fluffy rounds ACMA filled with olives or chocolate, borecki more bright poacas Buns – as customers arrive. He tells me that they sometimes get annoyed with him about the prices. Jars of pink and white sugared almonds and an entire counter of elegant layer cakes decorated with fruit and chocolate remain untouched, which are now a bit too expensive for most.
“Sugar and wheat prices have gone up. One kilogram bag of flour was 110 lira [£6.15] back in January; Now it’s 220 lira,” he says. Pointing to some of the cheapest buns, he adds: “We couldn’t make up the prices for Posakasi Even more so, because people can’t afford it.”
When Turkey’s official inflation rate broke 50% in February, it represented both a two-decade high and a major political problem for the government. The finance minister, Nureddin Nebati, insisted earlier this month that the surge was “temporary”, while Erdoan recently vowed to protect Turks from inflation.
“As Turkey’s economy prepares to become one of the top 10 economies in the world, we have said that we will not waste this opportunity with reckless and thoughtless steps,” he said. “We will get out of this situation in a way that will not allow our citizens to be crushed by inflation.”
Buying cheese on the street of Istanbul: the official inflation rate is now 61.14%. Photograph: Burak Kara/Getty Images
Contrary to the advice of most experts – rising inflation is linked to the government’s efforts to fundamentally overhaul Turkey’s economy, keeping interest rates low in the belief that it will stimulate it and increase production. There have also been frequent changes in key central bank personnel – Turkey has now had four central bank heads in three years.
“Yes, everyone is experiencing inflation around the world, but Turkey is experiencing it at about four or five times the rate of others,” says economist Alp Erink Yeldan at Istanbul’s Kadir Has University.
“It follows a series of policy mistakes and ambitious expansionist projects, including pursuing an economic policy that eschews the laws of gravity.”
Inflation itself has become a political issue: in January, Erdoan fired the head of the country’s official statistics agency, TÜİK, outraged that last year’s official inflation data showed a record high. The independent economic research group Enag, which tracks Turkey’s inflation rate using the same metric as the government, calculated real inflation in March at 142.63%. “One hundred and forty two percent is hyperinflation, no doubt about it.” Yelden says. Since the price hike began last September, the real inflation calculation of Enag has consistently been twice the official rate, he adds.
Turkey’s financial crisis has been exacerbated by Russia’s invasion of Ukraine, which has pushed up global food prices, especially for wheat. The lira’s fall against the dollar was already affecting Turkey’s ability to import wheat, but the loss of Ukrainian supplies has left it to find alternatives, including a dip in its own reserves.
‘I paid a 1,000 lira electricity bill for just these two machines in February,’ says Mehmet Aslan, pointing to two refrigerators holding butter, thick yellow rounds of cured meats, cheeses and butter from the city of Rise, where From comes his family (as is that of Erdoan). Last Ramadan, Aslan says his shop was bringing in 6,000-7,000 lira a day in sales; This year he is lucky if it breaks 1,500 lira.
“People are raising prices,” he says, pointing to a big jar of honey. “I could only make 400 lira” [£21] And nobody will say anything. I could even make it 500.”
Erdoan’s administration is determined to keep interest rates low. Photo: Adam Alton/AFP/Getty Images
Still, Aslan is reluctant to blame the government for the current situation. “Inflation is now out of government’s control,” he says. “I’m not happy with the prices. I blame the population – it’s out of Erdoan’s control and everyone is trying to bring him down.”
Turkey’s efforts to find a diplomatic solution to the war in Ukraine – to put Erdoan back on the world stage as a politician rather than an ambitious autocrat – have helped quell some of the criticism. According to polling organization Metropol, his personal approval rating rose to 43.3% in March, while the AKP’s vote increased by 3%.
Yet the surveys also showed that more than half – 53.6% – of Turkish citizens were only managing to meet basic needs last May, while a quarter said they could not cover their essential costs . Earlier this year, delivery and supermarket workers went on a protracted strike to demand a wage increase in line with inflation.
Energy costs began to rise in Turkey earlier this year, but, along with the price of wheat, Russia’s invasion of Ukraine has increased them. Turkey imports about a third of its gas from Russia. State-owned pipeline operator Bottas said this month that the price of gas for electricity generation would rise by about 45%, prices for industry by 50% and for homes by 35%.
As prices rose, Kemal Kilicdaroglu, leader of the opposition Republican People’s Party (CHP), announced on camera that he would not pay his electricity bill until Erdogan brought down prices. AKP officials termed it a “provocation”.
I make brioche bread, and the price of eggs, flour, sugar, butter … everything suddenly increased
Punar Duru, Bakery Owner
Ordinary Turks remain “busy with the economy”, says Ekrem Kunedioग्लूlu, an economist with the opposition yi party. It is hoping to convince the Turkish public that it can recover the economy as elections are due on or before 2023, which are due to begin. “What we see from the data is deepening poverty is on the rise, meaning incomes are not meeting basic needs. Inflation may come down next year but deepening poverty will be difficult to solve.
Pinar Duru, who runs a boutique bakery in Istanbul’s affluent Sihangir neighborhood, says she has started baking bread only to order and opening her shop on time to save energy costs.
“From October onwards, inflation started hitting hard,” she says. “I make bribes, and the price of eggs, flour, sugar, butter… all of a sudden went up. It’s still doing this, on a daily basis – one day I check the price of eggs, and the next day it differs.”
Duru says Turkey’s efforts to find a solution in Ukraine and potentially bring down food prices in the process provide little comfort. “It doesn’t bring me any comfort or distraction – I live with prices in my regular life, and so do my friends. Yes, we talk about war, but right now we’re only talking about inflation.” She says that prices are changing every day and everyone is scared about their future. “I’m not going to feel comfortable or safe until I see the dollar going down “
