More and more Turks are suffering from the collapse of the pound. Anyone who can save something is looking to turn it into gold or hard currency. Gasoline, food, travel – everything is getting more expensive. What are people afraid of, says Deutsche Welle.
Essential goods are becoming more expensive and this is felt by everyone. Officially, annual food inflation in May was 17.5% – about one percent higher than headline inflation in Turkey, according to a report by Istanbul’s Neue Zurcher Zeitung. Author Volker Pabst explains that at the beginning of last year a dollar was exchanged for less than 6 Turkish lira, and now – for 8.70 lira.
“Gasoline and fertilizers always go up when the dollar rises. That’s why farmers sell their produce more expensively,” said a fruit and vegetable vendor at a market in Istanbul’s central Fatih district.
Meat has become a luxury
A butcher’s salesman adds that meat has become a luxury for many people and says that last year he received deliveries of meat 3 times a week from the slaughterhouse, and now only one delivery is enough because he sells significantly less.
When there was a similar jump in prices in Turkey two years ago, President Recep Tayyip Erdogan accused traders of pumping up inflation. Especially people from the poorer social strata in Turkish society feel the increase is very severe and are forced to take into account every pound. They give about 1/3 of their income only for food.
Why does the Turkish lira not stop falling?
Earlier this year, the minimum wage in Turkey was raised by 21.6% and currently stands at 2,826 pounds. In big cities, however, this money is not enough for anything. The Türk-Is union sets the poverty line for a family of four at £ 8,197. If international criteria are taken as a basis, it turns out that almost 18 million Turks live in poverty, Neue Zurcher Zeitung commented, recalling that even before the pandemic, the country had experienced great economic difficulties.
The publication quotes Meryem Meric, who has a small fabric workshop. “If I have some money left, I buy one gram of gold. I prefer it to buying dollars,” she said. At present, one gram of Turkish gold costs about 500 pounds. However, many people also invest in hard currency. In June, the total savings of Turkish citizens in foreign currency exceeded those in Turkish lira. And even at the high interest rate of 18%, with which interest rates are deposited, they are completely “eaten” by inflation.
The risk factor is Erdogan’s policy
President Erdogan’s current economic problems and inconsistent policies pose a huge risk to Turkish citizens, who fear a new devaluation of their money. In this regard, ARD reminds on its website that the Turkish president has long been opposed to high interest rates as a means of combating inflation. In the last two years, he has replaced three central bank governors. But each time it led to a new depreciation of the pound and a new jump in inflation.
In early June, inflation reached levels of nearly 15%, which was its highest value since the end of 2019 so far, according to Business Insider. For comparison: in the euro area inflation at the beginning of this year was 1%. The depreciation of income and savings mainly affects food prices, with vegetables, fruits, eggs, oil and milk rising the most.