Shoppers stroll through the aisles of a bazaar in Konya, Turkey. The country is experiencing brutal inflation, with food and non-alcoholic beverage prices rising 70.3% year-on-year in March.
Diego Cupolo | Nurphoto | Getty Images
For Turks, the humble green plum (“erik” in Turkish) represents the beginning of spring. An intensely sour fruit, it is only available once a year around April, when the plum tree bears fruit and they are picked before ripening.
For many decades, the sour plum was an affordable food for the working class, even if it was only an annual treat. But the rise in prices and the fall in the value of the Turkish lira in recent years have made this “harbinger of spring” and once-a-year delicacy absent from Turkish tables.
Perhaps because of its place in Turkish tradition, social media was appalled by posts showing a kilogram (2.2 pounds) of green plum on sale for 690-750 Turkish liras ($47-51 $). In a country where the monthly minimum wage is around $290, the price of the plum has reached the amount that many people would set aside for rent.
“New economic model”
Turkish President Recep Tayyip Erdogan has been in power since 2002 – when he ran on a platform to tackle the hyperinflation that has long plagued Turkey.
The early days of his Islamist-conservative Justice and Development Party (AKP) government will be remembered for the free-market policies that helped rebuild the economy. But in recent years, Erdogan has pursued a tactic of lowering interest rates to keep inflation from rising – the reverse of the approach typically used by central banks.
Turkey is on its fourth central bank governor since 2016. During this period, interest rates have varied from less than 10% to almost 25%.
Seref Isler | CNBC
He called his approach a “new economic model”, telling parliament in November that it would boost jobs, growth, exports and cheap credit, according to an article in Turkey’s Hurriyet Daily News.
“We are going to lift this scourge of interest rates on people’s backs. We certainly cannot allow our people to be crushed by interest rates,” Erdogan told AKP party lawmakers in November.
“I cannot and will not stay on this path with those who defend interest rates,” Erdogan said.
“Monetary policy is not working at all”
Erdogan’s words strike a chord with his conservative base, some of whom say the Koran endorses trade but views debt with interest as a sin. The belief is that only a select few benefit from interest rates, not society as a whole.
Turkey’s economy is suffering from this monetary policy, Arda Tunca, an independent economist and columnist at Turkish news site PolitikYol, told CNBC.
“Monetary policy is not working at all,” Tunca said. “Real income per capita has been depleted over the past seven to eight years and purchasing power has weakened considerably. The most important point is that nothing is being done to prevent inflation from rising .”
The president pressured traditionally independent central bank governors to lower interest rates and ousted those who resisted. The central bank began cutting rates in September from 19%, despite high inflation, which was then still below 20%. The rate now stands at 14%.
Meanwhile, the lira has lost more than 60% of its value against the dollar in just six months.
Since Turkey’s agricultural industry imports a range of items from seeds to fertilizers in dollars, the depreciation of the lira has translated into high food prices for households. Turkey’s CPI data for food and non-alcoholic beverages showed a 70.3% year-on-year increase for March.
Turkey has fertile land for agriculture. But the country is dependent on agricultural imports.
“The current government is not opening the way for local manufacturers and producers to develop their manufacturing and production capacities,” Tunca said.
No apparent plans to raise rates
Ahead of the 2023 elections, the AKP and its officials are digging in, with no apparent plan to raise interest rates.
Tunca said that while short-term changes can stem the bleeding for now, more will be needed: “Turkey has needed structural changes for decades. The only way to overhaul Turkey’s economic policies for development purposes is to configure a new set of policy tools that has the ability to modernize the economy.”
Learn more from November 2021
In a recent speech, Erdogan acknowledged that rising global energy and food costs have hit Turkey – without mentioning any link to interest rates. Instead, he said the government would crack down on those who set high prices.
“Turkey’s population over 40 has experienced the severity of income equality distortions. Yet younger generations are experiencing such high levels for the first time,” Tunca said.
So it seems that the tradition of eating green plums covered in salt remains a distant memory for much of Turkish society.