When Will Prices Calm Down?

Well, Turkish people are not the ones that you would consider exactly ‘calm’. Since our social behaviour is not stable, the market behaviour in the country is similarly formed. We are a nation that gets mad quite quickly, gets soft all of a sudden, inflicts greater harm on itself by getting unnecessarily angry in the face of an insignificant situation and doesn’t care about anyone else’s problems if its own business is good.

We tend to immediately blame the analyser and hush them up instead of thinking about our mistakes or failures. Depending on the situation, we tend to display different behaviours, such as “continuing to do something that is not right as long as no one knows about what we’re doing” or “when caught, showing remorse or impertinence, well, depending on the situation again”. Economics is not just mathematics, no phenomenon that encompasses human activity, therefore human beliefs, and values, can be explained only by positive science.

There’s one thing we are desperately trying to figure out: when will the deterioration in pricing behaviour end? The truth of the matter is it is not possible to prevent price fluctuations unless we stop acting irrationally or avoid actions that are driven by concern. Things will calm down when those who sell their goods and services for high prices will see that they will fall behind in the competition against those who offer the same good or service at a lower price.

There are businesses who incessantly stock up on goods that they think they will not be able to find in future. But, once they realize that they can suffer great losses due to sudden decrease in commodity prices, they will try to sell them all quickly. And people will give up the stocking up behaviour as well when they see that they can easily find the goods they had bought in large amounts in the past. But that won’t happen right away. If we are lucky, things will begin to return to normal the middle of 2023, if we are unlucky, this will take a maximum of one year, provided that we don’t suddenly fall into a spiral of hyperinflation.

What has happened so far? Here’s a brief summary: The government budget, the money supply and the government debt have increased, on the other hand, the private sector experienced difficulties accessing funds, and when it did access them, it had to endure extremely high interest rates on loans. Exchange rates have increased by more than one hundred percent compared to the same month of the previous year. Inflation rate is two-fold higher than the market rate and fivefold higher than the CBRT policy rate. In the meantime, the government has taken some important measures against those who make unfair profits and act against the rules of competition. However, the rise in agricultural products and food prices still continues.

So, under the circumstances, it is best to take actions that give confidence both to the citizens and the business world. I hope it has been understood that what the business world has demanded from the government so far has not been able to provide any protection from the problems we are facing today, because the disruptions in the supply chain caused unavoidable problems to arise in several domains including the flow of goods, services, and financial resources. It can be clearly seen that the patience of producers is about to run out, confirming what Foucault said in a 1971 interview, “Rules are made to protect one class from another”.

The way to improve this situation should be to talk directly to the people on the street, producers, and consumers, listen to their problems and actually do something helpful to solve them, rather than negotiating and quarrelling with the dominant powers of industry and trade. Unfortunately, the opinion institutions of the business world often tend to help the interests of those who hold dominant positions, which again confirms Foucault’s ideas: “Even the institutions that are supposedly independent move in the orbit of their own politics and values.”