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Turkey’s inflation soars to 73%, a 23-year high, as food and energy costs rise
- can16358p 4y agoLiving in Turkey here. It's impossible to not get affected even if you are paid in foreign currencies. As the economy spirals down, everything gets heavily taxed by the government trying to save itself (and only itself). So the price increases are MORE than the devaluation of the currency itself, which is extremely devaluated already. That number will probably be much more than 73% if normalized to actual purchasing power. For example: I could fill my car's tank ~550₺ (Turkish Lira) around October. Last month, it was ~1600₺. There are tons of more examples, and without any actual production in the country, I don't see any bright future here.
- driverdan 4y agoHow do you deal with this? Do you keep your money in a foreign bank with a different currency?
- SXX 4y agoTurkish banks still have foreign currency accounts and its not being confiscated by government in any way (so far). Exhcnage rates from EUR / USD to Turkish Lira is generally extremely close to FX rate. Ziraat exchange rate is better than one of Wise when markets are open.. And for those in Turkey who worry about economy and banks failing there are crypto exchange on every corner. You can turn USDT into USD cash and other way around for 2-3% fee.
- koheripbal 4y agoThis is the unspoken true role of "stablecoin" crypto - avoiding gov't currency controls.
- dageshi 4y agoI would guess confiscation (forced replacement with lira) is not that many steps ahead. The trigger would likely be if the government sees people starting to move their foreign currency accounts out of the country.
- dizhn 4y agoThis is already being applied to companies selling to foreign countries. As soon as you receive your payment you are forced to convert to TRY. You have to kind of immediately convert back to foreign currency and take the exchange markup and fees hit if you hope to be able to get new raw materials. Very few materials can be sourced locally. You also cannot enter contracts with foreign currency domestically anymore. The government has done almost everything save for flat out banning foreign currencies.
- topper-123 4y ago> there are crypto exchange on every corner. I don't use cryptocurrencies, could you explain how corner crypto exchanges work? I didn't even know that was a thing.
- SXX 4y agoUsually you just come to their office, send them USDT via TRON TRC20 and they give you USD cash.
- alchemist1e9 4y agoI’m in Turkey currently and I do not see crypto exchanges on every corner.
- SXX 4y agoWhere exactly in Turkey are you? In Istanbul and Antalya they're literally everywhere. There are no less crypto exchanges than money transfer points like Western Union.
- alchemist1e9 4y agoI’m in Bursa currently, bought gold in the old Bazar today, I was in Istanbul last week. Perhaps I’m blind but I’m pretty sure I would notice Bitcoin logos if I was seeing them.
- SXX 4y agoThis is really strange. A lot of currency exchange points in Istanbul also have USDT signs if you ask them. There also like 3-4 points close to Grand Bazaar with BTC and USDT ads on them.
- akvadrako 4y agoI've been in Istanbul this week and have seen at least 50 places with Bitcoin signs. Seems like every currency exchange point had them.
- alchemist1e9 4y agoI’ll look more closely when I’m back in Istanbul. I wonder if it is focused on tourist areas or locations? I’m living as average Turk not currently in tourist focused areas.
- SXX 4y agoYeah they're mostly in more touristic areas. A lot of normal exhchanges and Western Union / MoneyGram points also provide crypto exchange services.
- mrighele 4y agoKeep in mind that the Turkish government is planning to heavily regulate the crypto market too. I remember reading that they were going to require a license for companies operating in the crypto market, and forbid transfers outside of licensed operators, which makes the whole idea kinda moot (unless you're in for the speculation), since at that you might as well just keep your money in the bank. On the other side, I remember seeing one Bitcoin ATM in Istanbul.
- can16358p 4y agoCurrently no problem with foreign currencies at local banks. Though I keep a significant portion in crypto hard wallets anyway.
- im3w1l 4y agoIs Erdogan the kind of man that can see when something is not working and reverse course?
- trentearl 4y agoIt seems no: https://www.economist.com/the-economist-explains/2022/01/27/is-recep-tayyip-erdogans-monetary-policy-as-mad-as-it-seems https://www.economist.com/the-economist-explains/2022/01/27/....
- ratsforhorses 4y agoHe's old, autocratic and in power, also hugely trying to appeal to the (rural) "believers" ...so I don't think so... I think you have to be a special kind of honest when being a believer to admit you may be wrong.... and besides power is hugely corrupting, maybe a lot of the problem is patriarchy... I mean women are so beautiful they represent a danger (vulnerability ) to the hold men in general have on power... Funny how many young expat Turkish men in Germany seem to admire him (sad too) but that's anecdotal
- dizhn 4y agoYes. He has polls done very frequently and is famous for saying/doing one thing today and exactly the opposite the next day. However all he cares about is staying in power. He will not reverse course in economy or anything else unless it effects his chances of getting reelected. His being a candidate in the next election is not even constitutionally allowed but we do not talk about these kinds of irrelevant details.
- starkd 4y agoI doubt he's concerned with reelection. That part is assured already.
- dizhn 4y agoLike I said. If the elections happen on time he cannot even be a presidential candidate. This is due to term limits in the constitution that he himself passed with a referendum. They'll probably argue semantics and claim he can be a candidate. They have never discussed this in public yet. The other option is if the parliament decides to have early elections which requires opposition parties to vote in that direction too - which they might. The constitution allows him to be a candidate in this case. They might just do it. There are examples of them doing dumb things or maybe they are colluding with him. Who knows. If he can't run, any other AKP candidate has basically zero chance of being elected.
- zeroth32 4y agoGas increased everywhere, Europe had like 120% price increase. At least Turkey is not under sanctions so it will get cheap gas!
- akmarinov 4y agoYou mean, at least Turkey’s not sanctioning Russia, so they can get cheap gas and oil
- m00dy 4y agoTurkey is already in big trouble. Sanctioning Russia will make things only worse.
- akmarinov 4y agoIt’s not like everyone else is chilling with the current inflation running wild. True, Turkey had a lot of inflation before the whole war thing, but that was due to an atrocious monetary policy, with rampant nepotism on Erdogan’s behalf.
- ajsnigrutin 4y agoAs a european, to me it seems more like our EU leaders are sanctioning us, the EU people, and not russia...
- npc12345 4y ago
- ajsnigrutin 4y agoI know, but i'm just saying what the public is feeling right now here. Russia is still selling their oil to india and china, and europe is slowly destroying itself with the anti-russian sanctions and many other internal things they do. Germany went from one of the strongest economies in the world to telling their people to wear sweaters at home, because they'll be cold, while countries oposing the sanctions still have cheap gas (eg 1.23eur/l in hungary). Media is saying one thing, but people in the streets (and surprisingly, also in the comments everywhere, somehow not censored yet) complain and most not in the politically-correct way. Add to this the blatant censorship of media, eg banning RT in europe (let's be fair.. putin, being somewhat a dictator, banning CNN is perfectly understandable... but EU, "a pillar of democracy" banning RT, to me, seems a very very bad precedent), and stories like "evacuation of azovstal" (and not saying it was a "surrender") make people trust the media even less.
- cs702 4y ago"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." - John Maynard Keynes, The Economic Consequences of the Peace, 1919. Keynes wrote that to warn about the risk of inflation in Germany and its potential consequences -- years before high rates of inflation led to the failure of the German mark, the collapse of the Weimar republic, the rise of dangerous ideologues (the Nazis), and ultimately, World War II. If Turkey doesn't get inflation under control, it will implode.
- dgellow 4y agoAs far as I understand Erdogan created the situation himself and fired everybody who would disagree. I don’t think he plans to get the inflation under control.
- cs702 4y agoI never said he does. In fact, I have no insight into what he is thinking or doing. My comment is only pointing out how destructive high inflation is. Please don't attack a straw-man.
- tux3 4y agoI did not read GP as attacking a point you (haven't) made. It's merely extra information. Please assume good faith, otherwise discussions escalate into accusations.
- dgellow 4y agoDo you consider, and are you able to leave? Or is it restricted in some ways? I’m just a random stranger but wish you the best.
- koheripbal 4y agoYour question is exactly why the EU did not admit Turkey into the union. It would not have been able to handle the people migration that would have ensued.
- aaomidi 4y agoEU is about to deal with this too. We have a globally inflated economy.
- spockz 4y agoI suppose GP also meant to say the EU wouldn’t be able to handle the emigration on top off the current situation.
- elorant 4y agoWe're already dealing with it. In Greece gas prices have reached €2,3/litre. Inflation is north of 10% and rising. Electricity costs have more than doubled and caused a lot of political stir. If this goes on for months it's more than likely there would be civic unrest.
- RF_Savage 4y agoI paid 2,499eur/liter yesterday. And I can still remember paying 1,3eur/liter in 2020.
- burntoutfire 4y agoSame in Poland, 7.9 PLN now vs 3.9 PLN at the beginning of covid.
- 4y ago
- hammock 4y agoWhat about real estate? How is that faring
- gus_massa 4y agoHi from Argentina! At least here real state is a good option, but to buy a small single room "studio" apartment, I need to save one or two years of the total income of my family. Where do I save that meanwhile? With a high inflation $100 today are like $30 in two years. And that's assuming I save every single cent. If I spare some money for food and the electricity bill, buying an apartment takes much more time. If you have plenty of money you can buy a big apartment, or a whole hotel or something. The problem is how to save a small amount of money for a year. For example save each month to buy next year a new fridge or a notebook.
- petre 4y agoOh man. You don's save during inflation. You buy stuff. Stuff you could easily sell for a "profit".
- gus_massa 4y agoI know, I know, don't worry. Instead of buying things to resell, I prefer to buy in advance things I'm going to use. For example enough concentrated laundry soap for 1 year, or tuna cans for two months. They have a good volume to price ratio, and they don't spoil. [I could boy more tuna cans, but it looks too weird.] This is useful to absorb extra payments, for example we have a bonus half salary in July and December.
- can16358p 4y agoA few years ago I rented a house for 3000₺. Now I'm paying 4800₺ which is dirt cheap. If I were to rent it again, I probably wouldn't find it under 7000₺. Real estate prices are somewhat proportional. It's profitable if thought in terms of Turkish Lira. But when corrected for inflation, not really.
- m00dy 4y agoI feel you man. Last week, I was in Turkey and I could fill my dad's car around ~1000₺. Honestly speaking, It has just started. End of 2022 and first quarter of 2023 will be terrible.
- throwaway894345 4y agoAny idea how this is playing out politically? Is the public opinion blaming anyone in particular? Erdogan? Russia? The west?
- can16358p 4y agoEveryone who has at least very basic education and comprehension skills knows he's the 100% reason of it. (Some are just evil and still at his side, but let's forget it for a moment) But, there is a lot of corruption and there's about ~30% of the population which is exteremely uneducated and/or under Stockholm Syndrome and still supporting him. That percentage + cheating in elections + telling "the west is the reason" keeps him in power.
- slim 4y ago"he" being Erdogan I guess
- bcrosby95 4y agoT
- aiProgMach 4y ago> But, there is a lot of corruption and there's about ~30% of the population which is exteremely uneducated and/or under Stockholm Syndrome and still supporting him. Sorry, while I'm far (very far) from being a fan of Erdogan. I take a distance quickly when I read someone talking like this about their own people. From experience (from another 3rd world country) we have people that say the exact same words, and they're the most ignorant people on the local politics but they think they are superior and they know better because they are "liberal" and they follow the foreign (usually western) press but they keep loosing most of their political fights because they only see from very narrow angle. I'm not implying you're like that, I just want to say that this is dangerous way of thinking on the local politics of most countries.
- can16358p 4y ago
- onesafari 4y agoWhat is functioning as a good store of value in that environment? Gold? Bitcoin? Stocks? Real estate?
- can16358p 4y agoWell, virtually anything but Turkish Lira. I keep dollars and crypto. Real estate isn't a bad option either. Basically anything that's not practically pegged to TL is a good choice in my opinion. And this includes almost anything: foreign currencies, crypto, real estate, cars, gold, stocks (foreign) etc.
- redisman 4y agoIf you have a house or a place to install them then something like solar panels in Turkey would be a great investment as it generates income (or at least cancels out future expenses )
- pydry 4y agoI spent a few months in Turkey last year. You could tell that there was a risk of mass unrest because there were heavily armed police with armored vehicles prominently parading around. I thought this was to be expected. What I thought was interesting was that there was a major deployment with armored vehicles in a well to do neighborhood off the tourist trail. Literally outside the Carrefour Gourmet where I bought overpriced European ingredients, in fact. IDK if they were extra sensitive coz expats were there, coz they were feeling extra protective of the upper middle classes or even coz they were afraid that the upper middle classes would be the ones to riot. Ive not seen anything like it elsewhere except in altamira, caracas.
- beebeepka 4y agoEver been to Sicily? I counted 3 different types of police and heavily armed military units patrolling the streets on regular basis. That was well before the pandemic. Maybe that's how some places are run
- tetris11 4y agoHell, same with Brussels pre-pandemic
- pydry 4y agoIt wasnt heavily armed & riot police deployments that surprised me it was their deployment in what seemed like fairly quiet upper middle class neighborhoods. I only saw that once before - in altamira caracas. Ive seen plenty of armed police in Italy but they were focused in highly trafficked city centre/touristy areas. Italy seems pretty excessively militarized but the pattern of deployment is normal.
- orhmeh09 4y agoIt’s always like that, nothing to do with this wave of inflation.
- tyingq 4y ago> there were heavily armed police with armored vehicles prominently parading around That's not new, and probably isn't related to mass unrest. My guess is it was related to some intelligence about PKK activity.
- ShivShankaran 4y agoAlmost all of the modern hyper inflation in countries is due to external debt in foreign currency which is usually USD. This could have been solved if interest rates were raised making the lira expensive. Same with Zimbabwe with projects done in USD. Sri Lanka had a project boom last 10 years with USD. This does not apply to US because the debt of US is either internal or USD. I guess partially the reason jpow is dragging his heels on raising interest rates
- pmontra 4y agoInflation 73%? Interest rate is 14% https://www.tcmb.gov.tr/wps/wcm/connect/en/tcmb+en https://www.tcmb.gov.tr/wps/wcm/connect/en/tcmb+en
- neilwilson 4y agoRaising interest rates just makes things worse. You’re paying people more money which they then spend to keep up with the prices. Interest/price spirals work in the same way as wage/price spirals https://new-wayland.com/blog/interest-price-spiral/ https://new-wayland.com/blog/interest-price-spiral/ Turkey is suffering from a collapse in their terms of trade. They need to stop luxury imports to make room for food and fuel. And they need to put firms with foreign borrowings through administration to get rid of the foreign debt. Ultimately though government needs to cut its spending because its capacity to tax is probably at the social limit the society can stand. It’s a mess, but neoliberalism won’t help.
- nootropicat 4y agoWell, Erdogan agrees with you and results are clear. The argument is wrong, mostly because even if deposit and borrow rates were equal (they aren't), central bank offers and charges it on MB, but borrow rate is in the end charged on all loans in existence - much larger than MB. 1. someone borrows (new) $100 from the central bank at the variable central bank rate - currently 0% 2. someone buys something for that $100 3. that $100 is loaned to yet another person at the variable rate 4. that person buys something with it, the buyer deposits $100 to the central bank At the end there's: $100 in the central bank. Loans for $200. Increasing the interest rate to 1% increases total liabilities by $2 after one year, but total base money only to $101. That's a deficit of $1. In other words demand for money has increased relative to the supply. This mechanism explains why more advanced economies can function with lower interest rates - because even a small base rate has a high multiplier, while in simple economies the multiplier is low. There are more implementation details in practice but the fundamental mechanism stays the same.
- asah 4y agoAFAICT in modern times with modern government surveillance and weapons, instead of uprisings and coups, what we see instead are the quiet evacuation of the best and brightest, which then spirals a country into further decay over the course of a few years.
- treis 4y agoThere was a coup attempt in Turkey just 6 years ago
- sureglymop 4y agoWow. I cannot believe it's already been 6 years. Time truly flies.
- asah 4y agoAttempt.
- zmgsabst 4y ago> in modern times with modern government surveillance and weapons, instead of uprisings and coups None of that helped in Afghanistan — where the locals defeated the US via persistent warfare. Such tactics will work even better when insurrectionists can directly attack US production facilities, ambush data centers and technical staff, assassinate politicians, and attack solder’s families. And that’s before considering whether some portions of the military would side with an uprising.
- redisman 4y agoThey’re getting a large part of the brain drain from Russia. I’m not sure if those people are planning on staying and starting businesses or looking to continue on to EU for higher salaries
- tyrfing 4y agoI'm not sure the data supports that: https://en.wikipedia.org/wiki/List_of_coups_and_coup_attempts#2020%E2%80%93present https://en.wikipedia.org/wiki/List_of_coups_and_coup_attempt... Fleeing countries has an ancient history, and it's naturally always been easier for higher classes with access to resources.
- CSDude 4y agoTurkish person. We’ve founded a startup in November, local and global developments making me a bit worried. Since then everything is almost 2-3x expensive. Most visible and absurd thing to see is that People drive their cars noticably slowly so that they consume less. People dont go out as they used to. Driving in summer vacation and spending a few days would cost a signifcant sum. Even if earning foreign currency, everything feels very expensive.
- SXX 4y agoI'm not Turkish, but I fled here from Russia due to a war. And rent certainly got super expensive in Antalya due to number of people like me, not inflation. I noticed that only some prices are so badly expensive for person earning USD and it's mostly electronics. Though Turkey has 35% tax when buying from Amazon so yeah it's due to taxation and local regulation. Can you please share some examples of what's got specifically expensive in last couple of years?
- CSDude 4y agoElectronics & cars is nothing new, it was always like that. But this year, all kind of food and basic necessities has become more expensive.
- SXX 4y agoGot it. I guess it's just me comparing food prices in Turkey to Russia and United Kindom. At this moment food in Turkey have mostly the same price as in Russia before the war, but still mucu cheaper compared to London. Fruits and vegetables I mostly buy on local markets and they're damn cheap considering that $1 == 16.5 Lira: tomatoes 5-10TL, cucumbers 2-8TL, Strawberry 10-15TL, oranges 2-4TL, apples 7-8TL, etc. Meat and sunflower oil kind of a pricey. Yeah at this point I get it's kind a pointless to list any kind of prices as they do in fact change with inflation. I understand that for most of people outside of IT it's very unlikely to have salary higher than $800 in Turkey, but over 3+ months I live here prices stay mostly the same in USD.
- moneywoes 4y ago
- danielrpa 4y agoMany years ago in my South American country, I had to deal with 2000% inflation in 1 year. It is absolutely devastating for most people, but the top 10% in income had easy access to special investment instruments allowing them to lose nothing and even profit from the inflation. Does Turkey have anything like that?
- samstave 4y agoEvery single country on the planet has exactly that.
- marvin 4y agoWouldn't it be as easy as having money invested with a foreign broker? Granted, this won't work if capital controls prevents money from easily flowing across the border, or if your country is sanctioned.
- redisman 4y agoThat’s assuming that you have significant money to put into savings. Most people live paycheck to paycheck so that will only protect 5% of their income that they can spare to put away. Ideally you could get paid in a stable currency
- ajsnigrutin 4y agoDude, yugoslavia, 313 million percent in a month (jan 1994) I live in a part that was already separated back then, but I'm still a billionaire, since I have quite a few >1billion dinar notes at home.
- nealabq 4y agoAt 64%/day, that's the third worst in this list: https://en.wikipedia.org/wiki/Hyperinflation#Ten_most_severe_hyperinflations_in_world_history https://en.wikipedia.org/wiki/Hyperinflation#Ten_most_severe... Also in the list: - Zimbabwe reached 98%/day in 2008. - Hungary reached 207%/day in 1946.
- lupire 4y agoFirst line of article is false: > Key Points - Turkey’s inflation for the month of May rose by an eye-watering 73.5% year on year, by should be to, if the headline and rest of article is true.
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- ncallaway 4y agoI’m not really seeing a significant semantic difference between “inflation rose by 73%” and “inflation increases to 73%” The latter puts the focus in a slightly different place, but they both seem to communicate the same essential fact, so I don’t see why the latter would be more accurate than the former? What am I missing? Edit: never mind, I understand now. “By” would be referred to a percent raise in the rate of change of inflation
- cuteboy19 4y ago10%->17.3% (by) 10%->73% (to)
- alkonaut 4y agoLast time I visited Turkey 25 yesrs ago the Lira was basically counted in millions. I remember exchanging some beer money and getting stacks of freshly printed 10k bills. I assume that was also after a period of massive inflation in the 80s or 90s? Some time after that they must have redefined their currency and dropped a few zeros. Have there been any other similar periods in between or has it been a pretty stable 2 decades? Are the causes similar this time? External shock and some misguided voodoo macroeconomics?
- iso1210 4y agoThe old lira was retired and the new lira came in 2005 roughly at about 1.30 to the dollar. It's now 16 to the dollar, up from 8 to the dollar a year ago. The old Lira was 15 to the dollar in 1975, by 1985 it was 500 to the dollar (devaluing 42% a year), 1995 was 43,000 to the dollar (56% a year), and by 2001 it reached 1.3 million to the dollar (77% a year) From 2001 to 2005 it was relatively stable, and the new lira came in and only lost half its value from 2005 to 2015. Things have been getting worse since 2015 though.
- aaomidi 4y agoI've lived in Iran when that country went through hyperinflation. People think their country is immune to hyper inflation. They're not. You're in for a surprise. Until we think communally about inflation, this cycle will keep repeating.
- TiccyRobby 4y agoThe %73 is the official number, which is absurdly obscured. This research group is more accurate: https://enagrup.org/?hl=en https://enagrup.org/?hl=en which states that the yearly inflation is %160.
- tnfru 4y agoThis may be a stupid question, but how is any value above 100% possible?
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- stefan_ 4y agoInflation is "measured" by tracking the price increase of some representative items like food staples or fuel. Prices of course are free to increase much more than 100%.
- marcosdumay 4y agoSome product basket costs $1 at the beginning of the year. At 100% inflation, at the end of the year it will cost $2. At 200%, it will cost $3, and so on.
- timerol 4y agoIf a banana goes from costing $10 to costing $26, that's a $16, or 160%, rise in price.
- larsnystrom 4y agoInflation is measured in price increases. So 100% inflation means the price increased by 100%, i.e. prices doubled.
- dageshi 4y agoIf something costs $1 yesterday but costs $2.50 today that is an increase of 150%. How inflation is tracked differs from country to country but typically it's based on looking at the prices for goods the average citizen might buy and tracking the price increases/decreases from year to year.
- wimwasmw 4y agoImagine living in a country with this sort of inflation and running to dollars (with 15% inflation) instead of to bitcoin. It's amazing people can't see the writing on the wall for all printable currencies in 2022.
- redisman 4y agoBitcoin as a inflation hedge is a meme that takes 5 seconds to see has no basis in reality. During historic inflation in the US, Bitcoin the inflation protector is.. -40% against the USD in the last 6 months. At least Gold is up 4% on the 6 month so that’s a small hedge.
- papito 4y agoI guess appointing your son-in-law to run the monetary policy has its quirks.
- mensetmanusman 4y agoFuture historians will hopefully be able to decouple the pandemic economic-shutdown effect from the war effect. We were told food prices would skyrocket after border controls were implemented in 2020/1. Russia definitely screwed the world with the war and energy costs though.
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- brink 4y agoI worry about extreme conditions like this. They have a historical effect of radicalizing the locals.
- fallingfrog 4y agoIt’s funny, just a few years ago everyone was talking about the Turkey economic miracle- how Erdogan was a business genius and so forth. Turns out, it was just another financial bubble.
- timeoperator 4y ago* Turkiye (https://edition.cnn.com/2022/06/02/europe/turkey-trkiye-united-nations-scli-intl/index.html https://edition.cnn.com/2022/06/02/europe/turkey-trkiye-unit...)
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- novateg 4y agoInflation is everywhere, it’s not just Turkey
- awsrocks 4y ago
- lemursage 4y agoAt this point -- how do one may try to fix such a situation (assuming there's a political will to do so, which judging from Erdogan's actions, may simply not be there). Cutting public spending? Resetting the currency?