Cost of erik plums soars as prices rise, lira falls
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In Konya (Turkey), shoppers shop the bazaar aisles. Inflation is a serious problem in the country, with non-alcoholic and food prices increasing 70.3% each year for March.
Diego Cupolo | Nurphoto | Getty Images
Turks see the humble green plumb (“erik” as it is called in Turkish) as the sign of spring. It’s a bitter fruit that’s only available once per year, around April. The plum trees bear fruit in this time period, and the fruit is picked before they ripen.
Sour plums were affordable for decades and enjoyed by the working classes as an occasional treat. However, rising Turkish prices and a falling value for the Turkish lira have meant that this once-a year delicacy and “harbinger” of spring is no longer available on Turkish tables.
Social media is often shocked by photos showing the weight of a kilogram (2.2 pounds) due to its Turkish heritage. You can buy the green plum for as low as 690-750 Turkish lire ($47-$51). A country with a monthly minimum wage of around $290 has seen the price for the plum rise to the point that many would rent it.
The ‘New Economic Model’
Turkish President Recep Tayyip Erdogan has been in power since 2002 — when he ran on a platform to combat hyperinflation that long plagued Turkey.
The early days of his Islamist-conservative Justice and Development Party (AK Party) government will be remembered for 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’s fourth central bank governor is now in place since 2016. Interest rates ranged from 10% to nearly 25% over the same period.
Seref Isler | CNBC
In November, he declared that his economic approach was a “new model” and stated before Parliament that it would increase jobs, growth, and exports. a report in Turkey’s Hurriyet Daily News.
“We are going to lift the burden of high interest rates off people’s heads. “We cannot let interest rates crush our people.” Erdogan told AK Party lawmakers in November.
Erdogan declared, “I cannot and won’t be on the same path as those who defend interest rate,”
“Monetary Policy isn’t working at all”
Erdogan’s words resonate with the conservative base. Some of them believe that while Islam approves trade, they consider debt and interest to be sinful. It is believed that interest rates are only beneficial to a few and do not benefit society in general.
According to Arda Tunca (an independent economist and columnist for Turkish news site PolitikYol), Turkey’s economy has been suffering from this monetary policy.
Tunca stated that “Monetary policies are not working at all.” “Real income per head has decreased over the past seven to 8 years. Purchasing power is also declining.” Importantly, inflation cannot be stopped from increasing.
President Trump has pressed traditionally independent central bank governors for lower interest rates. He also removed any who refused. The central bank started lowering interest rates from 19% in September despite the high inflation that was still under 20%. The current rate is 14%.
In just six months, more than 60% has been lost in the value of the lira against the dollar.
Turkey’s agricultural industry imports many items in dollars. The devaluation of the Turkish lira means that households are paying high food costs. CPI data from Turkey for food and beverages revealed a 70.3% increase year-over-year in March.
Turkey is blessed with fertile agricultural land. However, Turkey is heavily dependent upon agricultural imports.
Tunca stated that the incumbent government did not allow local producers and manufacturers to improve their manufacturing capabilities.
There is no plan to raise rates
AKP is preparing for elections in 2023. Its officials have been digging into the matter, but there are no plans to raise interest rate.
Tunca stated that although short-term measures can stop the bleeding temporarily, they will need to be continued. “Turkey needs structural changes since decades. A new set of tools that can modernize the economy is the only way to reform Turkey’s economic policy.
More information starting in November 2021
In a recent speech, Erdogan conceded that the rise in global energy and food costs has hit Turkey — without mentioning any link to interest rates. Erdogan has stated that the government would punish those who set high prices.
Over 40 years old, Turkey’s population was subject to severe income inequality distortions. Tunca explained that the younger generation is witnessing these high levels of income inequality for the first-time.
It seems as though the Turkish tradition of eating green plums with salt on top may be a long-forgotten one.
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