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E-mail Xinhua, December 12, 2023
by Burak Akinci
ANKARA, Dec. 12 (Xinhua) -- A pivotal change in economic policies hasn't so far solved Türkiye's inflation problems and consumers say that a planned raise of the minimum wage will only offer short-term relief for cash-strapped households.
Türkiye's annual inflation accelerated to around 62 percent in November, the highest level this year, according to official data released last week.
The rate at which prices are increasing fell slightly from 3.43 percent to 3.28 percent from October to November, but figures remain high compared to the same period last year.
The central bank has raised interest rates sharply since President Recep Tayyip Erdogan's reelection in May, rolling back some of its earlier, unconventional measures that were blamed for causing a cost-of-living crisis and a weak currency.
An ultra-loose monetary policy has been reversed and other measures such as tax increases have been implemented.
According to official data, higher interest rates have begun to moderate domestic demand, fulfilling one of the key objectives of the central bank.
But for consumers, inflation remains staggering as prices continue to rise.
"We expected an improvement in our purchasing power with a drop in prices, but that didn't happen, prices are still high on market shelves and in shops," Meltem Guney, a preschool teacher told Xinhua in capital Ankara's popular Tunali Hilmi Avenue, adorned with many shops and boutiques.
This mother of two complained especially about soaring food and housing prices.
"The price of housing has doubled, nearly tripled in a year. The price of heating is also very expensive," she lamented.
The central bank anticipates price growth will peak next May at as high as 75 percent and then fall to 36 percent by the end of 2024.
Meanwhile, Erdogan's government is planning a sizeable increase in the minimum wage for next year to ease the burden of inflation on households.
Millions of workers earn the minimum wage in Türkiye and a raise in their income is a major issue in the country.
In July 2023, the minimum wage was raised by 34 percent, from 8,500 lira to 11,402 lira (394 U.S. dollars) monthly.
Ercan Uzun, a municipal worker, is a minimum wage earner. He told Xinhua on Tunali Hilmi Avenue that he cannot make ends meet with his salary.
"The high cost of living has a big impact on my household," he said, complaining that the economic overhaul has not so far improved his finances and that a raise in the minimum wage will only offer a temporary reprieve.
"Inflation will eat into the raise," he said.
In Uzun's view, what Türkiye needs is "a better and just distribution of wealth" to reduce the gap between the poor and the rich.
Despite enjoying economic growth during the first decade of Erdogan's rule since the early 2000s, Türkiye has been experiencing uninterrupted double-digit inflation since the end of 2019.
However, despite ongoing troubles, 2024 may hold "promising" prospects for the Turkish economy, some experts believe.
Timothy Ash, London-based senior emerging markets sovereign strategist at RBC BlueBay Asset Management, said in a recent interview with the semi-official Anadolu Agency that the policy reversal will have positive results in terms of foreign investments.
"International investors are eager to return to Türkiye," this analyst said, predicting that the lira would stabilize next year, and the deflation process would begin. Enditem
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