Shoppers walk the aisles of a market in Konya, Turkey. The country is experiencing brutal inflation, with food and non-alcoholic beverage prices rising 70.3% year-on-year in March.
Diego Cupolo | Nurphoto | beautiful pictures
To the Turks, the humble green plum (“erik” in Turkish) symbolizes the beginning of spring. A fruit with a strong sour taste, only once a year around April, when the plum trees bear fruit and they are picked before they are ripe.
For decades, sour plums have been a popular dish for the working class, even if only as a treat once a year. But soaring prices and the fall in the value of the Turkish lira in recent years have left “the harbinger of spring” and the once-a-year delicacy absent from Turkish tables.
Perhaps because of its place in Turkish tradition, social media was appalled by posts showing a kilogram (2.2 lbs.) of green plums selling for 690-750 Turkish lira. Turkey ($47-51). In a country where the monthly minimum wage is around $290, the price of plums has risen to the point where many will have to spend on rentals.
‘New economic model’
President of Turkey Recep Tayyip Erdogan has been in power since 2002 – when he ran a foundation against the hyperinflation that has long plagued Turkey.
The early days of his conservative Islamic Justice and Development Party (AK Party) government will be remembered for free-market policies that helped rebuild the economy. But in recent years, Erdogan has pursued a tactic of lowering interest rates to keep inflation from rising – the flip side of an approach commonly used by central banks.
Turkey serves as its fourth central bank governor since 2016, and during that time, interest rates have ranged from less than 10% to almost 25%.
Seref Isler | CNBC
He described his approach as a “new economic model”, which in November before parliament said it would boost jobs, growth, exports and cheap credit. a report on Turkish Hurriyet Daily News.
“We’re going to take this interest rate scourge off people’s backs. We certainly can’t let our people get crushed by interest rates.” Erdogan told AK Party lawmakers in November.
“I cannot and will not stand on this path with the defenders of interest rates,” Erdogan said.
‘Monetary policy is not working at all’
Erdogan’s words have sparked a clash with his conservative base, with some saying the Quran approves of commerce but considers debt with interest a sin. The belief is that only a few benefit from interest, not society as a whole.
Arda Tunca, an independent economist and columnist for Turkish news site PolitikYol, told CNBC that the Turkish economy is being affected by the outcome of that monetary policy.
“Monetary policy is not working at all,” Tunca said. “Real per capita income has been dwindling over the past seven to eight years, and purchasing power is weakening a lot. The most important point is that nothing has been done to prevent inflation from rising.”
The president has pressured traditionally independent central bank governors to lower interest rates and weed out opponents. The central bank began cutting interest rates in September from 19%, which, despite high inflation, then remained below 20%. The rate is currently 14%.
Meanwhile, the lira has lost more than 60% of its value against the dollar in just six months.
As Turkey’s agricultural sector imports many items from seeds to fertilizers in dollars, the falling lira has resulted in high food prices for households. Turkey’s CPI data for food and non-alcoholic beverages showed a 70.3% increase in March year-on-year.
Turkey has fertile land for agriculture. But the country is dependent on agricultural imports.
“The current government does not pave the way for domestic manufacturers and manufacturers to develop their capabilities in manufacturing and manufacturing,” said Tunca.
No clear plan to increase rate
Ahead of the 2023 election, the AKP and its officials are working on, with no clear plans to raise interest rates.
Tunca says that while short-term changes may stop the bleeding now, more will be needed: “Turkey has needed structural change for decades. The only way to overhaul it Turkey’s economic policies for development aim to configure a set of policy tools capable of modernizing the economy.”
Read more from November 2021
In a recent speech, Erdogan acknowledged that the rise in global food and energy prices had affected Turkey – without mentioning any link to interest rates. Instead, he pointed out that the government will sharply reduce the price of high bidders.
Tunca said: “Turkish residents over the age of 40 have experienced severe levels of income inequality distortions. However, younger generations are witnessing such high levels for the first time. “.
And so it seems likely that the tradition of eating green plums covered with salt may remain a distant memory for a large section of Turkish society.
