Food imports to be allowed to push inflation down

After annual inflation reached 7.91 percent in April, the Economy Ministry is considering a new formula to prevent inflation. Minister Zeybekci announced that they may allow food imports to decrease food prices



Economy Minister Nihat Zeybekci has said the government might allow the import of some products in order to decrease food inflation.Zeybekci said the ministry expects a growth rate of 1.5 percent for the first quarter of the year, while this figure might be higher for the second quarter. The growth forecast of 4 percent will be achieved throughout the year, Zeybekci said, adding that they might issue import permits for food products, which contribute to the rise of inflation.Stressing that the year-end food inflation of 9 percent - forecasted by the Central Bank of the Republic of Turkey (CBRT) - is realistic, Zeybekci underscored that current food inflation of 14 percent is completely speculative in that some act in line with their election concerns. Zeybekci said some use the upcoming election as an opportunity to manipulate, underscoring that the rise in potato prices is not reasonable since currently there is no potato shortage. Driven by election concerns, some control the market by stocking potatoes."Even if we do not take concrete steps, developments will drive down inflation," Zeybekci said, adding it would be wrong to make predictions about year-end inflation by taking the current inflation figures into consideration. Zeybekci attributed this to the fact that mathematical figures are incongruent with reality because of speculation, which has risen ahead of the June 7 general elections.Zeybekci said some measures will be taken to curb the rise of food inflation, underlining that they would not completely liberalize imports. Referring to the speculative movement in the price of white beans last year, Zeybekci said prices plummeted when the ministry allowed the importing of white beans with a joint decision with the Food, Agriculture and Livestock Ministry. "We did not continue to import it when we have reached the desired level. We will interfere in it if we see that prices disturb the market," Zeybekci said, stressing that anytime they might allow the import of some food items, they will do so by taking their sort and quantity into consideration. According to Zeybekci, this would be done without disturbing domestic producers. These measures will be taken to curb food prices, which triple when it is delivered to the market from producers. Zeybekci said an import permit will not be issued for wheat, barley and processed meat, underscoring that this year's wheat harvest surpassed Turkey's need by at least 5 million tons.In reference to the food committee established by the government, Zeybekci said the committee convenes at regular intervals and works in all fields where the government considers the margin, which arises while a product passes from producers to consumers, is unacceptable. It makes political decisions about the margins and presents them to the Economic Coordination Committee.According to Zeybekci, six currencies that constitute the dollar index have lost around 27 percent of their value since June 2007, whereas the Turkish lira has depreciated by 23 percent. However, this value saving has melted away over the past one-and-a-half months. Zeybekci described this situation as a permanent perception triggered by the election atmosphere. "I believe that when the exchange rate is freed from speculation, it will have a positive impact on interest rates. As experienced during all pre-election periods, everyone has expectations about production and consumption ahead of this election as well," he added, reiterating that everything will return to normal in June.Zeybekci said inflation is important, however, permanent harm dealt by inflation is much less dangerous than the harm dealt by low growth and unemployment. Growth will be realized at 1.5 percent in the first quarter, and support of the domestic market will start with the elimination of such perceptions, Zeybekci said. Zeybekci predicted that the contribution of the domestic market will be stronger since exports continue to contribute to growth in terms of number and quantity. "We will achieve 4 percent growth this year and growth will surpass 1.5 percent in the second quarter," Zeybekci concluded.