Bread, meat and a blame game:food prices fuel Turkish inflation

ISTANBUL: Standing amid a jumble of food stalls in an Istanbul market, 61-year-old Gulsen Yuce wonders how she can stretch an already tight budget to make ends meet as food prices rise week after week.

Inflation has become Turkey’s biggest economic challenge, hitting the pockets of ordinary people even as President Tayyip Erdogan and the ruling party have built their reputation largely on economic growth and stability.

"A head of lettuce is 5 lira and I have difficulty paying that much for it.

I live on my own, I get by on fish or poultry instead of red meat," said Yuce, one of the 10 million Turks who scrape by on pensions as low as 1,000 lira a month.

Global food prices have fallen to their lowest in nearly seven years, but Turkey has consistently struggled with food costs overshooting headline inflation - at a rate that has at times outpaced other emerging markets.

Ankara’s inability to cool the rise has fuelled a blame game among food producers and retailers, with each accusing the other of hiking prices.

Industry officials and economists say there are deeper structural problems, from the lack of a long-term agricultural policy to a supply chain hindered by middlemen and arcane bureaucracy.

"Turkey sticks out like a sore thumb among the major emerging markets whose inflation rates are significantly above target," said Nicholas Spiro of Lauressa Advisory, an economics and property consultancy.

"There’s little indication that monetary policy will be tightened sufficiently any time soon to curb inflationary pressures, which are particularly prevalent in food despite the sharp decline in global food prices."

Annual inflation hit 9.58 percent in January - the highest since the middle of 2014 - fuelled by an 11.69 percent rise in food prices, data showed this week.