Living With High Inflation…

Last week, I have written an article about the poverty and hunger threshold in Turkey and uploaded a video on YouTube, comparing the expenses of a single person with a household of four.

Although the cost of living alone seems to have increased faster than a family of four in the last two years, I have also shown with examples that it is impossible to survive if both husband and wife has a job. The inflation rates show that the deterioration in the cost of living and pricing habits are here to stay for a long time and will lead those who are excited to start a new life, like me, to make mathematical calculations all the time.

I like to explain economic developments to my readers using my own experiences as real life examples, instead of boring them with mathematics. So, as usual, I will attempt to take a different look at the figures announced yesterday.

The soaring prices of large domestic appliances, houseware and furniture showed me how difficult is to start a new chapter in a new life. Well, these prices have increased more than 80% in the last year. Likewise, there has been a 100% increase in food prices on an annual basis, even though they declined slightly in June. The producer and consumer prices are already affected by the recent energy hikes. A rough calculation tells me that we will face a nightmare at the end of the year in which inflation will be 50% higher than the CBRT’s estimation.

“Official Inflation and Real Inflation.”

You always ask me: Do you believe the inflation rates released by the TurkStat? Well, it doesn’t matter whether I believe it or nor. The important thing here is that I have been saying for the last two years that all businesses in Turkey need to calculate their own inflation rates based on their costs.

Obviously, there will be wage adjustments in many companies or institutions, including universities, due to the recent minimum wage hikes. However, it is difficult to say whether employees whose wages have been adjusted with the previous minimum wage hike will receive a wage increase or when they will receive it. Sadly, the increase that the government will make will have a merely symbolic effect in terms of improving people’s lives.

Although I appreciate the efforts made not to oppress the employees against inflation, I would like to point out that the deterioration in pricing behaviour continues in the face of constant wage adjustments. It would be delusional of us to expect prices to go down in this vicious cycle. The producer’s inflation is 60 points higher than the consumer’s and companies are stuck between increasing costs and the prices they constantly change. No matter how much companies increase their increases, the costs continue to rise at least as rapidly.

Even the people who are dominant in their sectors say that they have difficulty dealing with the costs even though they apply the prices they want. Slowing down the economy could be a solution, but we are rapidly rushing towards a premature election. No government would slow down the economy vis-à-vis approaching elections. And that’s the reason why the government’s budget has been almost doubled.

Apparently, inflation will continue to be a part of our lives even after the elections. Although I highly expect that the government will change this policy once the election results are out, we will inevitably experience its aftershocks.