Collaborative fight against inflation

Here’s the problem: If public sector wants private sector to make sacrifices, the Government should start making cuts in government spending, even reduce taxes to more rational levels since it is not fair at all that the public sectors keeps on spending while expecting only private sector to save money.

One of the most intriguing details, by the way, is the fact that the whole team of economy officials are participating in meetings now as opposed to the fact that only one minister used to represent the economy administration at such conventions, which shows that coordination must have been established among the economy team members.

As far as I can understand from the ministers’ media statements, here’s what they are trying to say, “All this exchange rate mess has led to an exorbitant rise in consumer prices and there are some companies and individuals who are trying to take advantage of the situation. But, you may all rest assured because we are going to implement effective price controls to prevent any such thing happening.”

A very positive step, indeed… I think effective price controls will help increase public trust in government. At least, those adjusting prices at their own sweet wills will have something to fear.

“What about PPI?”

However, 45% swelling in producer price index cannot be explained merely with “opportunism”. This drastic rise in PPI will inevitably affect consumer prices considering global increase in commodity and energy prices as well as the recent exchange rates ascent in Turkey.

In short, it is just not possible to reduce inflation once and for all with those newly released measures. However, it may be helpful to bring down the swelling consumer prices.

But what I really think is that we need more drastic measures. If inflation starts to get out of control, we may face pretty tough situations in the future.

Reducing demand or launch discount campaigns will just not be enough to fight back against inflation even though it’s not such a bad idea. However, as I have mentioned yesterday too, if you are absolutely determined to fight against inflation, then you should take measure to reduce production costs and convince producers to sell their goods and services at more reasonable prices.