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Turkish Food Fight Spreads With Fines, Raids as Inflation Stings

Cagan Koc
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Turkish Food Fight Spreads With Fines, Raids as Inflation Stings

(Bloomberg) -- Turkey has found that fighting words alone aren’t enough to deter the people it blames for runaway food inflation.

After weeks of bashing those deemed price-gougers as traitors and even terrorists, President Recep Tayyip Erdogan’s AK Party is backing up threats with deeds. Fines are on the way after raids of wholesale food markets in five provinces on Feb. 6 uncovered “exorbitant” price increases of up to 800 percent for certain items, Trade Minister Ruhsar Pekcan said on Sunday.

Authorities also want to cut out middlemen by purchasing vegetables directly from farmers and selling them at cut-rate prices in Turkey’s two biggest cities, with tents up and running at numerous locations from Monday. Discount sales will be expanded to include cleaning products, according to Erdogan.

Whether price-gouging alone is at fault remains a question, especially after the rapid depreciation of the lira in August raised the cost of food imports and transportation. Recent flash floods in Antalya may have also contributed to some shortages, although Treasury and Finance Minister Berat Albayrak has dismissed the idea that adverse weather was to blame, saying it damaged only a fraction of Turkey’s greenhouses.

“The inflation reduction campaign is perceived to distort relative prices and to be unsustainable,” Bank of America Corp. analysts said in a report.

But with municipal elections less than two months away, the showdown against rampant inflation is a political no-brainer because high food costs disproportionately hurt poorer sections of Turkey’s 82 million people that traditionally have supported the president’s party. In taking the fight to market stalls and warehouses, Erdogan suggested the government’s resolve would be no different than when it battled armed Kurdish separatists.

“The government will finish off those terrorizing wholesale food markets in no time, the way it finished off those terrorists in caves,” Erdogan said in televised comments on Sunday.

With food inflation at an annual 31 percent, the highest since at least 2004, the government is resorting to top-down solutions, going as far as deploying local police forces to monitor stores. Following raids this month, the Trade Ministry is looking to penalize 88 companies with fines of over 2 million liras ($381,000), Pekcan said in a statement.

The municipalities of Ankara and Istanbul will open stalls hawking cheaper vegetables at dozens of locations on Monday. Erdogan said they’ll be sold at cost price. On a monthly basis, the price of eggplants, cucumbers and tomatoes jumped 81 percent, 53 percent and 39 percent, respectively, according to official data.

“Our inspections will continue across Turkey at full steam to give no respite to opportunists,” Pekcan said.

(Updates with Erdogan’s comment in third paragraph, analysts in ffifth.)

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, Paul Abelsky, Amy Teibel

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