After seeing the data by Istanbul Chamber of Commerce, the CPI figures did not come as a shock to me. I had a rough estimation of how it would turn out to be. As a result, there is nearly 70% inflation in Turkey, and it is not possible to deal with it through the policies that are currently in place. We cannot bring the inflation under control unless we effectively fight the monopolies and oligopolies in the market and reduce this sense of panic in the society.
I asked a local tourist who was furious about the fact that an agricultural product, which can be bought directly from the farmer for 7 TRY, is sold for 70 TRY in a store: “Yes, you can purchase is from the producer for 7 TRY, but considering other expenses such as logistics, employee expenses, store rent, packaging, energy, etc. how much do you think they should sell it for?” The cashier nodded and silently thanked me that I rushed to his aid, and the furious customer calmed down a bit. Obviously, neither the seller nor the buyer is happy because of the cost increases. Prices will remain sticky as everyone tries to hedge their future risk now.
Here’s what’s got the most expensive in April: food, non-alcoholic beverages, housing-energy-water-gas, and clothing-footwear. Unfortunately, the price of any items has fallen April. The items that saw the highest price hikes are food and agricultural products, with a minimum of 35% and up to 70%. There was a drop only in the price of mostly seasonal products.
“Year-End Inflation Expectations Will Need to Be Revised.”
All these astronomical price hikes show us that we will finish the year with a CPI higher than that was recently revised by the CBRT. As expectations are revised, worries and concerns about the future grow stronger. However, no institution in the world was so far able to foresee a pinpoint prediction about inflation. Monthly expectations can sometimes match the reality, but annual inflation rate is now well above all expectations and projections.
The interest rates on commercial loans offered by private banks are quite low at the moment, but these rates may rise at any time depending on the CBRT policy rates. While there is hope that inflation will gradually decline, the concern that interest rates will gradually rise prevails.
We shall see how long the CBRT will be able to keep the current level of its policy rates.