Last week, I met with a journalist for an interview, and he asked me: “When will TRY 50 regain its former value?”. “Never” I replied to him. We can no longer buy the same quantity of goods for the same money. Maybe if we remove a couple of zeros from our currency.
Joking aside, periods in countries like Turkey, prices go up all the time, except for the rest periods. Since the prices will never go down again, there is no other choice but to ensure an increase in incomes. We will never say, “Thank God, prices have decline to their former level of 2 years ago” in any restaurant, cafe, or hotel.
TurkStat has recently published the foreign producer price index for March, which showed that there was an increase of 7.29% in March and the increase was recorded as 105.82% on an annual basis. The highest increase was observed in coke and refined petroleum products with 240.52% on an annual basis. The monthly energy increase is 29.3%. the price of Base metals went up by 147.57%, chemicals and chemical products increased by 123.21% on an annual basis.
On the other hand, we saw an increase of 122.84% in intermediate goods, 95.55% in durable consumer goods, 87.04% in non-durable consumer goods and 87.08% in capital goods. Goods with the least increase are not encouraging either: clothing prices were increased by 70.63% and there was a 79.35% increase in tobacco products with a high import rate.
In fact, the rise in PPI continues in the European Union. In March, Germany’s PPI increased by 30.9% on a yearly basis. Figures turned out to be higher than expectations on both a monthly and yearly basis. As long as the price increase in energy and commodities continues, it will take a longer time for the inflation to go down.
“As the commodity rally continues, it will get more difficult for Turkey to deal with its economy”
Oil Prices were around $60 this time last year, today they are about to exceed $110. Similarly, cotton prices have doubled in the same period. Although the Baltic Dry Index, which reported around the world as a proxy for dry bulk shipping stocks, has calmed down a bit, it is still fourfold higher than in it was in 2020.
The price of coffee, which we all enjoy, has doubled in the commodity market compared to 2020 while cocoa pursues a rather relatively calm course. Silver, an important commodity for the industry, is trading at twice the price it sold for
Since people get used to the prices after a while, I wanted to share these price developments with you in order to help us not lose our relative perspective on inflation. We know that all of the hikes I mentioned above will eventually affect the final products and services. Even based on today’s prices, we could say that it is becoming increasingly impossible for inflation to drop below 40% by the end of the year.
