Nebati: Solidification of inflation not expected

Neşe Karanfil - ANKARA

Treasury and Finance Minister Nureddin Nebati has said that together with the steps taken within the scope of the fight against inflation, the government aims to improve the inflation expectations day by day and break inflation inertia.

“In this context, we do not expect a long-term and permanent solidification trend in inflation in the upcoming period,” the minister said in a written interview with the Daily Hürriyet published on May 2.

Nebati noted that the disruptions in supply chains caused by the pandemic, in addition to the increase in global energy, food and other commodity prices due to the Russia-Ukraine war, increased the inflationary pressure all over the world.

“We are witnessing historical record levels on a global scale in producer-consumer inflation figures,” he said.

“For instance, inflation in the United States has been at the highest level in the last 41 years. Germany and France are experiencing the highest inflation in the last 40 years. For this reason, inflation is at the forefront of the list of things to be tackled on a global scale.”

Nebati reminded that in addition to the global adversities, producer prices inflation accelerated due to exchange rate developments in Turkey and reached 61.1 percent as of March.

“With all the measures we have taken since December, especially the ‘Currency Protected Deposit’ products, we have ensured stability in the financial markets and significantly controlled the volatility in the exchange rate,” he said.

“After the volatility in the exchange rate is over, we expect monthly inflation to normalize in the short term. On the other hand, high inflation realizations in December 2021 and in the first quarter of 2022 may cause inflation to remain high for a certain period of time. We expect a significant decrease in inflation in the coming period with the normalization of commodity prices, the stability in the exchange rate and the additional steps we will take.”

Reminding that the government made VAT reductions on food and basic necessities within the scope of combating inflation, Nebati noted that they expect businesses to reflect these discounts on prices.

Emphasizing that officials monitor whether the discounts are reflected on labels through the “Anti-Inflation Teams,” Nebati said, “With these teams, we never allow exorbitant price manipulation and stocking and take all necessary precautions for this.”

Noting that they started the measures from the production stage to ensure stability in the food supply, Nebati stated that the most typical example is the “Early Warning System,” which was created to detect yield and price developments for agricultural products in advance.

“The main factors determining inflation in Turkey are cost and supply-side factors and inflation expectations,” the minister said.

“In this context, we attach great importance to the stability of the exchange rate, and we will make the stability in the financial markets permanent with the new instruments we will introduce in the coming period. Our work is progressing in line with our goal of increasing the welfare and purchasing power of our citizens.”

Nebati added that the government is “determined not to oppress our nation under the pressure of inflation.”

“Penal procedures were applied to those who were found to have irregularities in their transactions,” he said.

“We will continue our policies and practices, which put stability and predictability at the center, without compromising fiscal discipline, by taking into account the needs of our citizens and the real sector in tax policies.”

Nebati noted that there is no new study on the structuring of tax debts.