Wealthy Turks drive consumption despite soaring inflation
A well-off minority is the driving force behind vibrant consumption in Turkey, but the party might not last long as inflationist pressures increase and the country’s current account deficit widens.
Home and car sales have perked up and shopping malls and entertainment venues appear quite lively in Turkey, even as an unyielding inflation and rife unemployment continue to haunt the country’s ailing economy. What to make of this seemingly contradictory trend? Are some Turks throwing barbeques on the flames of inflation?
Soaring prices remain the main problem of the Turkish economy, which was already in dire straits when the COVID-19 pandemic hit early last year. Having climbed to 17.5% in June, Turkey’s annual consumer inflation is likely to easily reach 20% in the coming months, given the much higher increases in producer prices — 43% in industry, 30% in services and 22% in the agricultural sector. The prevailing view among observers is that the big gap between consumer and producer inflation will soon translate into fresh price hikes for consumers.
