Turkish gov’t set to take measures to curb food prices: Şimşek

Turkish gov’t set to take measures to curb food prices: Şimşek

Turkish gov’t set to take measures to curb food prices: Şimşek

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It is unacceptable for Turkey to see double-digit inflation rates, a top official has admitted, adding that the government’s food committee would soon hold a meeting to take immediate measures to ease skyrocketing food prices. 

“This is an unacceptable situation,” Deputy Prime Minister Mehmet Şimşek said at a meeting in Istanbul on May 5. 

“The main reason behind the rise in inflation has been food prices. I have called the food committee for a meeting. We need to take serious measures to curb prices and we will,” noted Şimşek, while also thanking the Central Bank for its tight stance to maintain price stability. 

“We will see the positive impact of these monetary moves in the upcoming period,” he added. 

Turkey’s annual inflation rate increased in April, reaching its highest level in around nine years as a result of a weak Turkish Lira in several sectors, according to official data released on May 3. 

Consumer prices in Turkey rose 11.87 percent year-on-year in April from 11.29 percent in March, data from the Turkish Statistics Institute (TÜİK) showed. Annual consumer price inflation was also at the highest level since October 2008.

April’s consumer price inflation was driven by food prices which rose 1.23 percent from a month earlier.

In some street bazaars, the price of some produce like tomatoes rose 70 percent in recent weeks. Red meat prices have also continued to rise, despite a number of measures to ease costs for consumers.

Turkey’s Central Bank raised its inflation forecasts for this year and 2018 on April 28, saying it was ready to tighten policy further if needed, while adding that it was confident its recent steps would start to bear fruit in the months ahead.

Şimşek also noted that one of the strongest areas of the Turkish economy had been the strong public finances. 

Public finances

Noting that there had been some recent easing in the area, he said: “The limits matter in this area. Last year, our deficit rose significantly due to a number of key measures, including a coup attempt, terror attacks and an economic slowdown. The deficit is still complying with the Maastricht criteria. The budget deficit was 1.6 percent last year, which was a quite modest rate compared to many other countries. The point is here not to overspend.”

Şimşek noted that Turkish economy should return to a growth rate of 5-6 percent.

Turkey is one of the rare countries to recently succeed in improving its income equality, he said, while acknowledging that Turkey needed broader and inclusive reforms. 

If a country’s labor force and capital are productive and its institutions operate at a high quality, the country will achieve more permanent welfare, Şimşek said.

“Growth cannot be maintained through the public sector. Such growth stories do not yield the desired results. The best growth can only be achieved by the private sector, especially by highly productive and commerce-focused industries. We must make reforms to raise productivity,” Şimşek said. 

He also noted said the government planned to establish an investment bank or restructure an investment bank to support technology. 

The issue will be taken into consideration in May, he added.