ISTANBUL - Turkish President Recep Tayyip Erdogan has declared war on food inflation. With food prices rising nearly 30 percent and looming critical local elections next month Erdogan is turning to unconventional methods to rein in costs.
Subsidized food is being sold at distribution centers in Istanbul and the capital, Ankara, along with several provincial cities. The centers are part of Erdogan’s war on inflation.
In the pouring rain in Istanbul’s Kadikoy district people patiently line up to take advantage of reduced prices. With staples like onions and potatoes tripling in price, the distribution centers appear welcome by people seeking relief from soaring price tags.
“The food prices are high. Sometimes you go to the street market and go back home without buying anything,” said Sule who works at a nearby university. “Why? Because the produce is so expensive. You go near the leeks, and you see it is 6, 7 lira. Spinach prices rose up to 10 liras. Ok, I can afford some, but larger families cannot buy at these prices.”
Last year’s currency collapse unleashed an inflationary wave, driving up costs of food production.
The inflation surge comes at an inopportune time for Erdogan’s AKP, with critical local elections for control of Turkey’s main cities scheduled in March.
Erdogan, already campaigning hard, is seeking to blame food wholesalers and supermarkets, accusing them of price gouging and even labeling them food terrorists.
“In recent days they began playing a game on Turkey. Prices of eggplants, tomatoes, potatoes, and cucumbers began to escalate. It was a terrorist attack,” said Erdogan.
“We will not allow those to launch this terror” he added. “I promise you we will deal with these terrorists who are behind these rising prices like we have dealt with other terrorists that threaten our country.”
Police are raiding supermarkets and wholesalers suspected of price gouging and hoarding. The Turkish Trade Ministry has created a computer app allowing customers to compare prices in shops and report those suspected of overcharging.
Major supermarkets, seeking to avoid Erdogan's wrath, are slashing prices. Shop signs claim products are now being sold below cost, along with rationing on what can be bought.
"This has nothing to do with economics,” said economist Cengiz Aktar. “Turkey will dearly pay for these mistakes because these are gross economic mistakes. There will be huge price increases. People will have difficulties to buy food and the public finances will collapse one day.”
Rising costs and mounting state pressure on producers and retailers, has led to a new phenomenon in Turkey, “shrinkflation.”
“Shrinkflation has started, which is instead of rising prices, companies selling in smaller formats,” explains Atilla Yesilada, analysts for Global Source Partners.
“So a 100-gram chocolate bar is now being sold for the same price but it's only 80 grams and it's the same for toothpaste, etc. The plates are getting smaller in cheap restaurants, as people can't afford full portions,” added Yesilada.
Istanbul’s "Sali Pazar," is a traditional marketplace for bargains, drawing people from across the city.
However, the combination of subsidies and the state crackdown on prices is taking its toll on small traders. “It affected our sales by 50 percent. The customers come here and see the prices and don’t buy anything. They just walk off,” said Ali, looking at his unsold potatoes, which are selling at more than twice the price as at state distribution centers.
“Prices are very high (from wholesalers), he added. “You cannot compete with the state. How can we compete with the state? The state buys it for 3.5 liras and sells it to 2 liras.”
“My sales are not falling because I have not sold anything,” said tomato seller Hulusi, waving his hands in exasperation.
“How can sales go down when you don’t have any sales in the first place,” he added. “I have been screaming my heart out since morning and sold just 2 kilos to 2 customers.”
However, for Sali Markets customers eager for bargains, Erdogan’s price war is welcome.
“With the intervention of the president there has been some drop in the prices,” said Sule. “In the previous weeks they were quite high, and this makes the people content. Hopefully, this will keep going well.”
Driving down food prices and with it, public discontent, will be critical to Erdogan’s AKP maintaining control of key cities like Istanbul in next month’s local elections, analysts say.
“All the polls show the main concern for the voter will be the economy, and they will be going to vote to register their protests,” said Yesilada. “Nationwide, I expect AKP to suffer very large losses. I would not be too surprised if they lose Istanbul or Ankara.”