Istanbul's bread prices soar by 30% as Turkey battles rampant inflation

The Chamber of Commerce in Istanbul has decided to increase the maximum price of bread in the city by over 30 percent. This decision comes as many Turks struggle to make ends meet due to the rising cost of living, reports the Turkish portal Duvar.

Following the Istanbul Chamber of Commerce's decision, the maximum price for 200 grams of bread rose by 31.25 percent to 10 lira (approximately $1.24 CAD). Given bread's status as a staple food item, this price hike reflects the country's ongoing inflation.

The increase in the maximum price is attributed to the rising costs of ingredients such as flour and yeast, as well as higher labour and energy expenses. It was also highlighted that companies "are facing severe challenges due to these escalating costs".

In April, Turkey’s average annual inflation rate was 69.8 percent, according to the Turkish Statistical Institute on Friday Eastern Time. However, data from the independent inflation research group ENAG suggests that the yearly rate has climbed to 124.35 percent.

The central bank announced on Thursday Eastern Time that it had revised its end-of-year inflation rate forecast upwards by 2 percentage points to 38 percent.

With the cost of living on the rise, millions of Turks are finding it increasingly difficult to make ends meet, as reported by Duvar.

Turkey has been grappling with persistent inflation for several years, with prices rising at a double-digit rate continuously since mid-2018. A series of aggressive interest rate hikes by the country's central bank managed to slow down CPI growth at the start of 2022 into 2023, yet the 69.8 percent figure remains significantly higher than the central bank's annual inflation target of 5 percent.

In March, the central bank’s main rate was increased to 50 percent, and it declared that "restrictive monetary policy will continue until there is a substantial and persistent reduction in core monthly inflation."

Experts point out that such high interest rates adversely affect Turkey's economic growth. The nation's GDP is projected to grow by only about 2.8 percent this year, compared to last year’s increase of approximately 5.6 percent. This situation further escalates political pressure on the central bank to ease monetary policy. Turkish President Recep Tayyip Erdogan has consistently advocated for lower interest rates, viewing them as a means to boost the economy.

Nevertheless, the Central Bank of Turkey will likely resist political pressures and prioritize the fight against inflation. Market consensus suggests that the primary interest rate of the TCMB will remain at 50 percent at least until the end of 2024. Considering the significant economic challenges facing the country, the disinflation process is expected to be gradual, as reported by the Reuters agency.