Erdogan calls on companies to cut profits to help consumers hit by Turkey’s economic dire straits

Erdogan calls on companies to cut profits to help consumers hit by Turkey’s economic dire straits
Man of the people. A pro-Erdogan banner on a balcony in Gostivar, Macedonia.
By bne IntelliNews January 21, 2019

Turkish President Recep Tayyip Erdogan on January 21 called on companies to cut profits if necessary to help consumers through Turkey’s challenging economic time.

Companies should lower their prices, he added, in a nod to Turkey’s battle with its double-digit inflation, exacerbated during the currency crisis that hit the Turkish lira last year.

Erdogan—at the end of last week granted emergency economic powers he is now entitled to as his country’s first executive president—also said during a speech in Ankara that US President Donald Trump told him in a call on January 20 that Washington would take measures on the tariffs it is applying to Turkish steel imports. The two presidents agreed that there should be greater economic cooperation between their respective nations when they last week held a call during which they attempted to resolve differences over how to deal with the Kurdish fighters in Syria, which Ankara sees as a terrorist threat but which Washington sees as an ally that has proved of vital importance in its battle against Islamic State.

Last October, Erdogan’s son-in-law and finance minister Berat Albayrak declared an “All-Out War on Inflation Programme”, the main call of which was for private sector firms to join a voluntary campaign to reduce the price of goods by 10% until the end of the year.

Analysts were not particularly enheartened by the initiative, with some making it plain Turkey should rely on orthodox measures rather than such “voluntary” moves that might lack serious punch.

Erdogan and his ruling Justice and Development Party (AKP) are under pressure as the economy appears to be slipping into recession with local elections now only just over two months’ away.

On January 20, Albayrak was reported as saying that the government was set to focus on discrepancies in the prices of goods sold in supermarkets and street markets as part of its efforts to fight inflation.

“We do not see the prices that we want to see in supermarkets. We will talk to supermarkets. If there is a significant difference in prices between supermarkets and street markets this means supermarkets do not give the support we expect from them. We are looking at how the food chain works in street markets and supermarkets,” Albayrak was quoted as saying.

 “We expect a much stronger performance from all stakeholders [in the Turkish economy],” the minister added.

According to the latest official data, food prices increased by 1.08% m/m in December, bringing annual inflation in this item to 25%. Headline consumer price index inflation was 20.3% in 2018.

On a monthly basis, fruit and vegetable prices rose by 5.87% in December, whereas the annual increase was 30.8%.

In early January, the Turkish Statistical Institute (TUIK) denied it had allowed any warping to enter into its inflation calculations.