NewsIstanbul bread prices soar by 30% amid Turkey's rampant inflation crisis

Istanbul bread prices soar by 30% amid Turkey's rampant inflation crisis

Millions of Turks have trouble making ends meet - media report

Images source: © Getty Images | 2024 Anadolu

12:59 PM EDT, May 10, 2024

The Istanbul Chamber of Commerce has decided to increase the maximum price of bread in the city by over 30 percent, as reported by the Turkish news outlet Duvar. This move comes in response to the soaring cost of living, leaving many Turkish citizens struggling to make ends meet.

According to the new regulation set by the Istanbul Chamber of Commerce, the price ceiling for 7 oz (approximately 200 grams) of bread has risen by 31.25 percent, reaching 10 Turkish Lira ($1.24). This hike is a stark reflection of the country's rampant inflation, given bread's staple status in the Turkish diet.

The adjustment in bread prices was necessitated by the rising costs of essential ingredients, such as flour and yeast, alongside increases in labor and energy expenses. Companies have been vocal about their severe challenges due to escalating operational costs.

Turkey's inflation struggles were highlighted in April when the Turkish Statistical Institute reported the country's average annual inflation rate at 69.8 percent. This figure starkly contrasts with findings from the independent research group ENAG, which suggests that the actual annual inflation rate could be as high as 124.35 percent.

Moreover, the Central Bank of Turkey recently revised its end-of-year inflation forecast, increasing it by two percentage points to 38 percent.

The situation underscores a broader economic predicament, with millions of Turkish citizens finding it increasingly difficult to afford necessities.

Turkey's battle with inflation isn't new. The country has faced double-digit inflation consistently since mid-2018. Efforts to tame these spikes through a series of aggressive interest rate hikes by the Central Bank saw a momentary deceleration in consumer price index (CPI) growth around 2022 and 2023. However, the current rate of 69.8 percent remains significantly above the bank's 5 percent annual target.

In March, the Central Bank raised its main interest rate to 50 percent, committing to a tight monetary policy until there's a marked and enduring decrease in core monthly inflation. While high interest rates are crucial for controlling inflation, economists warn they may hinder Turkey's economic growth. After expanding by approximately 5.6 percent last year, Turkey's GDP is projected to grow by only about 2.8 percent this year.

Despite the pressure from political figures, including Turkish President Recep Tayyip Erdogan, who advocates for lower rates to stimulate economic growth, the Central Bank appears adamant in its resolve to fight inflation. Market analysts predict the main rate to stay at 50 percent at least until the end of 2024, as Turkey embarks on a prolonged journey to stabilize its economy. This complex economic landscape suggests that the road to disinflation will be a gradual process, according to reports from the Reuters agency.