As the Turkish government steps up its efforts to curb inflation, the country’s Treasury and Finance Minister has reportedly called on local manufacturers and retailers to impose a temporary price freeze.
Propelled by rising energy, food and housing prices, Turkey’s annual inflation hits its highest level in 20 years, at almost 70%. Inflation rose despite commodity tax cuts and government subsidies for utility bills to ease the load on household budgets.
Finance Minister Nureddin Nebati called for price fixing on the sidelines of his closed-door meetings with representatives of various industries on Thursday to deal with price swings, Bloomberg News reported, citing a person with direct knowledge of the question.
In addition to tax cuts, Nebati said on Twitter that they agree with food companies to take “bold steps” in their pricing policies.
“We will continue to work together with all our strength to prevent price fluctuations and ensure their stabilization,” the minister said.
During his presentations, according to the person quoted by Bloomberg, Nebati cited examples of extreme price hikes that hurt consumers as well as government-imposed caps elsewhere in the world.
In remarks that appear to confirm the report, the general manager of the Kopuz group of companies, Soner Kopuz, said that the grocery chains were not present at the meeting, but that the sugar and oil producers and the food suppliers present at the meeting agreed to fix the prices.
“Prices were set on 30 to 40 items in Europe or even 60 in some regions. As oil and sugar producers and food suppliers present at the meeting, we also agreed to set prices as far as possible,” Kopuz told private broadcaster Bloomberg HT.
Nebati also reiterated the government’s intention to prosecute those who exploit the situation to raise prices for profit.
“Aware of the importance of breaking the inertia of inflation, we have stressed that we will never tolerate unusual price increases,” the minister said.
The government “will never compromise on our fight against inflation”, he noted, stressing that different instruments would indeed be put into operation, without further details.
In an attempt to further address concerns, the government this week promised provisions to boost the purchasing power of low-income citizens and announced several measures to deal with soaring house prices.
The government is aware of the difficulties created by the high cost of living, President Recep Tayyip Erdoğan said on Monday, stressing that he would work to improve the purchasing power of low-income households through arrangements from of July.
Soaring commodity prices and Russia’s invasion of Ukraine, which led to soaring gas, oil and grain prices, have worsened the situation in import-dependent Turkey.
“Despite all global adversities, we will continue to coordinate with our businesses to protect all segments of our society,” Nebati said.
Inflation has surged since last fall as the Turkish lira weakened after the central bank embarked on a 500 basis point easing cycle in September.
The lira has fallen almost 5% against the dollar since last Wednesday and was at its lowest since December.
It weakened to 15.4675 against the US dollar and settled at 15.458 at 08:01 GMT on Friday.
The government has said inflation will fall under its new economic program, which prioritizes low interest rates to boost production and exports in a bid to achieve a current account surplus.
At the end of last month, the Central Bank of the Republic of Turkey (CBRT) revised its inflation forecasts for this year and next upwards, mainly due to rising commodity prices and supply problems. ‘supply.
It forecasts annual inflation to peak at around 70% by June before dropping to nearly 43% by the end of the year and single digits by the end of 2024.
The central bank has held its benchmark rate steady at 14% in four meetings this year and said measures and policy moves will prioritize so-called liraization in the market.
Rise in retail sales
Separately, Turkey’s retail sales volume, a marker of consumer spending growth, rose 2.5% year-on-year in March, official data showed on Friday.
Motor gasoline sales had the largest year-over-year increase in the month, up 12.4%. Sales of food, beverages and tobacco and non-food products (excluding automotive fuel) followed with an increase of 6.4% and 5.7%, respectively.
Among non-food items, sales of textiles, clothing and footwear rose the most, jumping 15.8%, followed by medical products and cosmetics, up 7%. Mail order and internet sales jumped 26.4% from a year ago in March.
On a monthly basis, the volume of retail sales increased 0.5% in March, with sales of food, beverages and tobacco growing the most.
Sales of beverages and tobacco increased by 4.3% over one month and non-food (excluding fuel) rose slightly by 0.1%. On the other hand, automotive fuel sales were down 5.1% from a month ago in March.