Use this link to view a short video “The price of a Turkish breakfast staple has risen 40%” from BBC.com
Inflation might just be the new buzzword for 2022. As concern grows that economies are in danger of overheating, central banks are taking action. In the United States where consumers are facing higher prices on everyday goods and investors are jittery, the Federal Reserve has promised a series of interest rate hikes over the course of the year, a policy decision it hopes will cool rising inflation. In other countries, like Turkey, the term inflation takes on a whole new meaning. Turkey’s official inflation rate is now 21 percent and its currency, the lira, has lost nearly half its value, a situation which is making it increasingly difficult for consumers to buy the goods they need and for businesses to survive.
Indeed, the struggle to survive in Turkey is evident at the many little kiosks dotted across the country’s cities. The kiosks sell simit, a popular breakfast bread often bought by consumers on their way to or from work. The price of the bread has risen by 40 percent in just one month, putting it out of reach for many consumers struggling with similar price increases on other everyday goods. With sales of simit tumbling by more than 50 percent, sellers are worried that they might not be able to keep their doors open. Rising prices of raw ingredients give them little alternative but to raise prices on their finished product. Turkey’s spiraling inflation has prompted its government to announce higher minimum wages, hoping that the policy will offset the rapidly depreciating value of the lira. However, critics claim that with inflation expected to reach 30 percent by the end of the year, the move will not be enough to get the country through its crisis.
Discussion Questions:
1. What is inflation? What does it mean in terms of consumer purchasing power? Why has the Turkish lira lost 50 percent of its value? What does the situation in Turkey tell you about inflationary pressures in the United States?
2. Discuss the link between inflation and retail sales. What are the implications of situations like the one in Turkey where sellers of simit are struggling to reach half their usual sales because of the country’s high inflation rates? Discuss the domino effect on the economy if retailers start to go out of business.
3. In response to the country’s economic difficulties, Turkey’s leaders have raised the minimum wage by 50 percent. What effect will this policy decision have on the ability of people to buy the goods they need? Why are critics concerned that it will not be enough to offset the country’s high rate of inflation?
Sources:
BBC.com: The price of a Turkish breakfast staple has risen 40%, Photo by Mae Mu on Unsplash.com