Turkish President Recep Tayyip Erdoğan's visit to a cooperative market to prove that prices are in a reasonable range has failed to ease Turkish citizens' discontent with the rising inflation.
Erdoğan on Oct. 3 visited a supermarket belonging to the Agricultural Credit Cooperatives of Turkey and said that the prices were "suitable."
He also said that he had ordered agricultural cooperatives to open about 1,000 new branches across the country in order to provide “suitable” prices for basic goods.
“We gave the order for about 1,000 of these businesses to open around Turkey, starting at 500 square meters each,” he said. “These are places where prices are suitable to our citizens’ budgets.”
Although he was content with the supermarket prices, it was revealed that he paid over 1,000 liras despite not buying essential goods, the daily Sözcü reported on Oct. 5.
His basket excluded meat, milk, cheese, butter, legumes, fruit and vegetables, Sözcü said, adding that Erdoğan purchased snacks only.
Turkish inflation accelerated to its fastest rate in two-and-a-half years in September as Erdoğan stepped up his unconventional efforts to bring down soaring prices.
Data released on Oct. 4 by Turkey’s official statistics agency showed that the consumer price index rose at an annual rate of 19.58 percent last month — up from 19.25 in August. The rate is nearly four times the central bank’s official inflation target and the biggest yearly increase since March 2019.
Erdoğan, whose ruling party is suffering from historically low poll ratings, has faced growing public discontent over the soaring cost of living, the Financial Times reported.
But the Turkish leader, who believes contrary to economic orthodoxy that high interest rates cause inflation rather than curb it, has also pressured the country’s central bank to lower borrowing costs even amid rising prices.
The bank slashed its benchmark lending rate last month. The decision, which left Turkey with the deepest negative interest rate of any emerging market, put fresh pressure on the embattled Turkish lira.
Public anger has focused in particular on food prices, which have accelerated even faster than the headline inflation rate. The cost of food rose almost 29 percent in September, according to the latest data.
Erdoğan has blamed rising prices on “opportunists” in the food and retail sectors. Last month his government announced a fresh round of investigations into supermarket chains that it accused of adopting “unreasonable” price increases.
The Turkish President, who built much of his early political success on the back of ushering in rising prosperity, has increasingly developed a reputation for eccentric and erratic solutions to economic problems in recent years.
In 2018, in the wake of a currency crisis that wiped almost 30 percent off the value of the lira, the government launched a campaign urging retailers to hold down their prices. The following year, the government launched municipal-run “people’s vegetable” stalls in major cities in an effort to combat what Erdoğan called “food terrorism."
Analysts warn that the combination of high inflation and low interest rates could lead to fresh pressure on the Turkish lira, which has hovered in recent weeks above what would have been a record low of nine to the dollar.
“The further rise in both headline and core inflation last month will provide some food for thought for the central bank, but we doubt that it will prevent it from pushing ahead with further interest rate cuts,” Jason Tuvey, an economist at the London-based consultancy Capital Economics, wrote in a note to clients after the data on Oct. 4. “Political pressure on the institution for lower rates appears to be swaying decisions.”