Inflation is the main problem, food stocks are sufficient in the context of the war in Ukraine: Nebati

Treasury and Finance Minister Nureddin Nebati said on Tuesday that inflation remained the economy’s biggest problem, reiterating the government’s determination to curb rising prices.

Nebati also said there had been a temporary disruption in food supplies after Russia launched an invasion of Ukraine, but stressed that the necessary steps had been taken by relevant ministries.

“The biggest problem facing the Turkish economy right now is high inflation,” Nebati told Ihlas News Agency (IHA). “We are aware of high inflation and are undertaking many studies to control it,” he added.

The authorities pledged to prioritize measures needed to tackle rising prices as global oil and grain prices rise due to Russia’s aggression in Ukraine. The government is also monitoring the potential risks of the conflict for the Turkish economy.

Russia and Ukraine account for almost 80% of Turkey’s grain imports, but Ankara said it does not foresee war-induced supply shortages and could turn to other sources .

“Our country’s stocks in terms of food are at a sufficient level,” Nebati said, dismissing reports to the contrary. “The reports that have been made consist of manipulation.”

Soaring global prices have added further pressure on the economy – which imports almost all of its energy needs – vulnerable to rising global oil, gas and grain prices.

Turkey’s annual inflation jumped more than expected to hit a two-decade high of 54.4% in February, official data showed.

All-round mobilization

Nebati pointed out that the government has stepped up its support to bring rising food prices under control, recalling recent tax cuts.

To mitigate the impact on households, last month the government reduced the commodity tax from 8% to 1% and subsidized a significant share of electricity bills.

He also announced a reduction in Value Added Tax (VAT) on electricity used for residential and agricultural irrigation purposes to 8% from 18%.

It also introduced a package of measures to reduce soaring electricity bills, including readjusting the level below which higher electricity tariffs for households and some more energy-using businesses come into effect.

Nebati stressed that the fight against inflation should include all players in the economy.

“The support of all our stakeholders in the fight against inflation is certainly very important. We also expect the support of legal persons…in order to carry out these steps that we have taken,” he noted. .

“We will continue our efforts in the coming period with the participation of all our stakeholders to reduce the inflation rate.”

He also noted that authorities are closely monitoring whether the recent measures are reflected on market shelves.

“Companies are closely audited and scrutinized by the teams established under our ministry,” Nebati said. “Strong action is being taken on a legal basis against companies that charge exorbitant prices and engage in stockpiling.”

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