True, I realize that I am talking about a very ambitious rate, but I am not saying that it will necessarily reach a double-digit level, I am saying that there is such a concern.
Aside from some concrete data, look around you, look at the change in prices! Isn’t it incredible…
And our perception of price increases has changed a lot.
No one is satisfied with increases of 5 or 10 percent anymore. No one raises less than 20 percent.
In fact, such a hike has not been seen very often.
Especially the hikes in the services sector…
A large number of companies can reflect the increase in costs in the final sales price. They reflect a 10-unit increase in costs in the final price as if it were 15 or 20 units.
And then you get these unbelievable prices.
The price of lahmacun in Bodrum used to be a very popular price indicator. Now it seems as if every part of Turkey has become Bodrum, a vacation destination; even a glass of water, a cup of tea or coffee is being sold at unbelievable prices. If anyone complains about this situation, they immediately raise objections:
“Do you have to drink your tea and coffee there, if you go to luxury places, don’t complain!”
The concept of luxury places varies for everyone, of course, but the basic measure here is that the same people can no longer go to places that some people consider luxurious.
You have a certain job, a certain income; you have the habit of drinking tea and coffee at the same café, meeting your friends at the same restaurant and having dinner, but you can’t do that anymore.
Those places have not become luxurious in recent times, they were not luxurious in the first place; since the increasingly impoverished fixed-income people could no longer go there, these ordinary places started to be seen as luxurious.
You know how we say the middle class has disappeared, that’s what we are experiencing.
You know how those price tags are changed morning and evening, the main reason for this is cost increases. However, as I said, while the cost increases by 10 units, the price increases by 15 units or 20 units, that’s different. It is very common to exploit cost increases.
But there is certainly a cost increase.
One of the most basic cost items is the exchange rate. At this rate, the dollar is likely to be 30 liras on average in January, which means an increase of around 3.3-3.4 percent compared to the December average.
This is a high rate. On a monthly average basis, the dollar increased by 17 percent and 15 percent in June and July last year after the elections. If January is surpassed with the increase I mentioned, this will be the highest increase in recent periods.
There is also a high increase in fuel due to SCT. Even if gasoline, diesel and autogas are not increased from now on, the average increase in January will be around 6 percent. We find this rate by taking into account the sum of the prices of the three products.
This rate is also relatively high. Moreover, the exchange rate is being allowed to increase, albeit slowly, and therefore, new hikes in fuel may come until the end of the month. There is a direct effect of fuel on the CPI and an indirect effect, and this detail should not be forgotten.
In January last year, consumer prices rose by 6.65 percent. Even though the increase in cost factors and the deterioration in the perception of inflation were much less than this year, the increase was 6.65 percent.
Can you tell me, what will happen this year, what can happen that will keep inflation below last year?
That is why the trend is worrisome and the price increase in January may reach 9 percent, as in July and August last year, or even push double digits, depending on the situation in the remaining days of the month.
Economic management also expects a high rate
In a sense, Treasury and Finance Minister Mehmet Şimşek admitted that a very high inflation rate is expected in January. Şimşek said the following at MÜİSAD’s annual evaluation meeting last week:
“Currently, the trend of both core and headline inflation in recent months is in line with our program targets. With the exception of January, this is the case every year, but we do not expect the trend to deteriorate fundamentally.”
In his speech, Şimşek said that a high rate is expected in January, but of course he did not mention a rate.
Here we tell you what that rate might be.
A rate that will push double digits will not be surprising.
