As the Turkish government intensifies efforts to curb inflation, the country's treasury and finance minister has reportedly called on local manufacturers and retailers to impose a temporary freeze on prices.

Propelled by rising energy, food and housing prices, Turkey’s annual inflation is running at a 20-year high of nearly 70%. Inflation has been rising despite tax cuts on basic goods and government subsidies for utility bills to ease the burden on household budgets.

Finance Minister Nureddin Nebati urged for the price fixing on the sidelines of his closed-door meetings with representatives of a range of industries on Thursday to address the fluctuations in prices, Bloomberg News reported, citing a person with direct knowledge of the matter.

In addition to tax cuts, Nebati said on Twitter they agreed with food companies on taking "bold steps" in their pricing policies.

"We will continue to work together with all our strength to prevent fluctuations in prices and ensure their stabilization," the minister said.

During his presentations, according to the person cited by Bloomberg, Nebati cited examples of extreme price increases that are hurting consumers as well as government-imposed caps elsewhere in the world.

In remarks that seem to confirm the report, Kopuz Group of Companies General Manager Soner Kopuz said chain grocery stores were not at the meeting, but sugar and oil producers and food suppliers attending the gathering agreed to price fixing.

"Prices have been fixed on 30-40 items in Europe or even 60 in some regions. As oil and sugar producers and food suppliers who were at the meeting, we also agreed to fix prices within the bounds of possibility," Kopuz told private broadcaster Bloomberg HT.

Different instruments

Nebati also reiterated the government’s intention to go after those who are exploiting the situation to hike prices for profit.

"Aware of the importance of breaking the inflation inertia, we stressed that we will never tolerate unusual increases in prices," the minister said.

The government "will never compromise on our fight against inflation," he noted, stressing that different instruments would be effectively commissioned, without elaborating.

To further try to address concerns, the government this week pledged arrangements to boost the purchasing power of lower-income citizens and announced several measures to address the soaring real estate prices.

The government is aware of the difficulties created by the high cost of living, President Recep Tayyip Erdoğan said Monday, stressing they would work to improve the purchasing power of lower-income households through arrangements as of July.

Soaring commodity prices and Russia’s invasion of Ukraine, which led to a surge in gas, oil and grain prices, have compounded the situation in import-reliant Turkey.

"Despite all the global adversities, we will continue to coordinate with our companies to protect all segments of our society," Nebati said.

Inflation has surged since last autumn as the Tırkish lira weakened after the central bank in September embarked on a 500-basis point-easing cycle.

The lira has dropped nearly 5% against the dollar since last Wednesday and was at its lowest since December.

It weakened as far as 15.4675 against the United States dollar and stood at 15.458 at 8:01 a.m. GMT on Friday.

The government has said inflation will fall under its new economic program, which prioritizes low interest rates to boost production and exports with the goal of achieving a current account surplus.

The Central Bank of the Republic of Turkey (CBRT) late last month revised up its inflation forecasts for this year and the next mainly because of the rise in commodity prices and supply issues.

It forecast annual inflation will peak at around 70% by June before declining to near 43% by year-end and single digits by end-2024.

The central bank held its key policy rate steady at 14% in four meetings this year and said measures and policy steps will prioritize so-called liraization in the market.

Retail sales surge

Separately, Turkey’s retail sales volume, a marker of growing consumer spending, rose 2.5% year-over-year in March, official data showed Friday.

Automotive gasoline sales saw the largest annual rise in the month, up 12.4%. Food, drinks and tobacco and non-food (except automotive fuel) sales followed with 6.4% and 5.7% increase, respectively.

Among non-food items, textile, apparel, and footwear sales rose the most, jumping 15.8%, followed by medical goods and cosmetics, up 7%. Sales by mail order and the internet surged 26.4% from a year ago in March.

On a monthly basis, retail sales volume rose by 0.5% in March with food, drinks and tobacco sales rising the most.

Drinks and tobacco sales increased by 4.3% month-on-month and non-food (except automotive fuel) slightly up by 0.1%. On the other hand automotive fuel sales decreased by 5.1% from a month ago in March.