The exchange rates in Turkey are gradually increasing every day, which is hardly useful to exporters, given the circumstances. It is not possible to guess whether this “slow” rise in exchange rates will mitigate the inflationary effects.
Inflation rates aside, when we look at the household food expenditure, we see that it is almost impossible for households to create economies of scale to reduce costs, unless it’s a four-person household. Along with products such as meat, fish and chicken, the prices of fresh produce continue to go up on a monthly basis. For households with less than four people to order in is no longer as cost-effective as it used to be.
The cheapest menu at fast food restaurants now costs TRY 100 per person. Even at supermarkets offering rather affordable prices, you have to pay between TRY 50 and TRY 100 for 250 gr of meat, and between TRY 10 to TRY 30 for one kilogram of fresh produce. And these are the cheapest prices.
“We Get Poorer as Exchange Rates Keep Rising.”
Today in Turkey, the cost of a healthy home-cooked meal varies between TRY 60 and TRY 110 per person. All of this tells us that a family of four living in Istanbul have to spend between TRY 7200 and TRY 13.200 per month to have a good nutritional diet, and therefore how difficult it is to make a living.
Almost all restaurants in Istanbul increased their prices twice in less than six months, which, I think, cannot be considered as a purely opportunistic attempt to make more money. Because, according to restaurateurs, their costs, especially staff costs, are rising rapidly. In one of my articles I posted months ago, I said that more than 50 percent of people eating at restaurants and cafes are foreigners and 50 percent of retail pharmacies’ revenue comes from foreigner spending. Beşiktaş and Şişli districts, where I was born and raised, are crowded with Middle Easterners, Russians and Ukrainians. Even the signs are written in their language. We used to feel poor when we visited EU countries, because of the Turkish lira falling to record lows against the euro. But we never thought that we would feel the same in our own country as well. Unfortunately, we too have become impoverished in our own home as our national currency became cheaper against the currency of those who come to our country. Unless things change, the high cost of living will never go down.
The best action to take would be to gradually liberalize capital movements, exchange rates and monetary policy in order to establish a new economic balance after the elections, which would enable us to see the real level of inflation, and then, by ensuring price stability, we will expect incomes to rise in the medium term. If we try to devise a different solution to deal with this problem, our chronic high inflation will quickly degenerate into hyperinflation. Therefore, once the elections are over, those in power will have to be rational in their economic decisions.