Buying power has decreased sharply due to inflation and many people are affected by this matter. The inflation caused a lot of problems for the Turkish citizens especially students and the middle class.
Inflation in Turkey rose above 85% last year. Currently the inflation decreased to 39,6%, and the lira has already lost 77 percent of its value since 2018.
Professor of economics at Bilgi University, Tugrul Hakyemez explains how this could happen: ”Inflation is caused by different factors, with the most important one being irrational economic practices. Erdogan thinks that the low interest rate is a way to decrease inflation while the economists know that it is the other way around.
He believes if he keeps the interest rate low, we could impress some foreign investors but that is not happening.” As the currency is not stable, it also makes it hard for Turkey to import products from foreign countries. ”We highly rely on import products and we buy those with dollars and euro’s, so if we cannot stable the currency rate we cannot stable the prices” Tugrul adds.
Tugrul believes that the middle class is the most affected by the inflation and because of that, the gap between the rich and the poor people has increased. ”Indicators show that our gross income has increased somehow but the shared salary of workers has decreased. The salary is based on an inflation ratio calculated by the institution which is corrupt. For example, they say there is 50% inflation but it is actually 100%. The problem is we only get 50% raise while it is 100% inflation so this is how we got into this problem. We got poorer and some people got richer.”
The rising prices are also significantly impacting students and young adults. Melike Yurekli is a student at the ODTÜ in Ankara and has a hard time managing her finances as a student due to the rising prices in Turkey. ”It affected me as a feeling that I became poorer every day, even buying a coffee or going to a restaurant became a luxury from time to time.”
Also, the prices of alcohol and tickets for a party have increased over the couple past years. ”Two years ago I went to the cinema and the theaters two times a month and had no problem with paying for that. Nowadays I struggle to save money and I cannot spend my money how I used to spend it” Melike adds. Melike used to go to a bar after school with friends for some drinks after class, but nowadays she and her friends drink some beers in her apartment instead of going out.
It is safe to say that the student life has drastically changed in the last two years due to the inflation. There is a huge need for financial support for students in order to help them cope with the high prices. ”Rent prices and restaurants have increased which are the two main expenses for a student. Two years ago I could afford a shared apartment, dance lessons, and go out regularly without working. Now I’m working but I have to think twice every time I pay for something. I know a lot of my friends and classmates feel depressed about this.”
Sela Bilgic is recently graduated and working fulltime as a museum assistant in Maslak. He wants to marry his fiancé but is struggling to afford a house together. ”My fiancé and I are both working fulltime but we are still living with our parents. We want to get married and have a house of our own but with these conditions it is impossible.”
Like many Turkish youth Sela yearns for change. ”It is a really bad situation in particular for the young inhabitants and students” Sela adds.
Possible ideas for reducing inflation according to professor Tugrul Hakyemez is to go back to the rational policy stated by the new finance minister. Tugrul believes that the new orthodox finance minister, Mehmet Simsek, has more healthy opinions on how to stabilize the currency. ”We have to trust the new finance minister that the situation will get better” Tugrul adds.
With the new finance minister, it seems that president Erdogan has no choice but to return to a rational basis and it seems that Turkey appears to be opting for a new interest rate policy.
Tugrul also states that Turkey needs to adjust to the western world because they got the money and Turkey needs their money. ”We need to play the game by their rules to attract further investments to get the economy back on track” Tugrul states.