(Bloomberg) -- Sales of vegetables and fruit at discounted prices by Turkish municipalities are proving to be more than a pre-election stunt to boost President Recep Tayyip Erdogan’s AK Party.
Annual food inflation will likely be slower in February than in the previous month after state-run stalls in large cities opened last week, a Turkish official familiar with the figures said on Wednesday.
Although Turkstat isn’t collecting data from the municipality-run stalls, the government-backed drive will have an impact on inflation figures since many stores monitored by the country’s statistics agency started to sell cheaper food items as well, the official said, speaking on the condition of anonymity. Turkstat didn’t immediately respond to a request seeking comment.
Acting after food inflation soared to the fastest pace since at least 2004, Turkish authorities decided to cut out middlemen by purchasing produce directly from farmers and selling it at numerous locations in cities including Ankara, Istanbul, Adana and Bursa. Food and non-alcoholic beverages make up the largest component of the consumer-price index, accounting for over 23 percent of the total.
Some privately-owned stores have matched the lower prices available at the municipality-run stalls. Discount sales may continue after local elections in March and will be expanded to include cleaning products and pulses, according to Erdogan.
Both the government and stores imposed a quota on how much discounted food each person can purchase. Turkstat will take some of the stores’ prices into account despite the quota, the official said.
Food and non-alcoholic beverage prices surged an annual 31 percent in January, the most since at least 2004, keeping consumer inflation above 20 percent, according to data released by Turkstat.
The price controls are only a temporary solution, said Tuncay Ozilhan, head of High Advisory Council of the Turkish Industry & Business Association. The country “is experiencing high food inflation due to mistakes made in the past,” he said.
To contact the reporter on this story: Cagan Koc in Istanbul at ckoc2@bloomberg.net
To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, ;Lin Noueihed at lnoueihed@bloomberg.net, ;Riad Hamade at rhamade@bloomberg.net, Paul Abelsky, Mark Williams
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