Lost Price Perception and the High Cost of Living in Turkey

Recent high inflation in Turkey has left all of us uncertain about what price levels should actually be. In particular, some businesses are turning this situation into an opportunity, stoking the high cost of living even further by raising prices beyond what is necessary. Looking at the underlying causes, several key factors stand out.

First and foremost, the imbalance of supply and demand is a major factor. Global events such as the pandemic led to disruptions in production and supply chains, causing a decrease in the supply of many goods and services. The depreciation of the Turkish Lira also increased the cost of imported products, pushing general price levels upward. Furthermore, during periods of high inflation, businesses tend to increase their prices even more by anticipating future cost increases. And of course, there is opportunistic pricing; some businesses take advantage of market conditions to raise prices unnecessarily.

The impacts of this situation are widespread. Consumers' purchasing power is declining; while incomes remain fixed (or increase far less), continuously rising prices severely reduce purchasing power. This leads to a loss of trust between consumers and businesses. Consequently, economic imbalances emerge, negatively affecting economic stability in the long run.

These continuously rising prices and the cost of living, along with uncontrolled pricing, erode trust within society. Seeing two neighboring tradesmen doing the same work price the very same product or service quite differently leads everyone to question whether the inspection mechanism is functioning. And the proportion of those holding an optimistic view that it works is very low.

So, is this inspection matter the same in every country?

Around the world, several countries implement successful methods to deal with such problems. Germany, for example, has a very effective inspection mechanism for price control. In Germany, the Federal Cartel Office (Bundeskartellamt) ensures that prices are set fairly and monitors excessive price increases. The average profit margin in Germany is determined by competitive conditions, preventing businesses from acquiring exorbitant profits. In 2022, following an audit by the Bundeskartellamt, significant fines were imposed on many businesses that engaged in excessive price hikes, forcing price increases back into realistic boundaries.

In Sweden, the Swedish Competition Authority (Swedish Competition Authority) plays a crucial role in market oversight. Heavy financial penalties and sanctions like license revocations are applied against unfair price increases. In 2021, inspections targeting some major supermarket chains in Sweden revealed that price increases were unjustified, resulting in serious sanctions.

Looking at France, we see a similar picture. Consumer rights are very strongly protected. The Directorate-General for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) enforces comprehensive laws to ensure price transparency and consumer protection. In 2023, audits conducted by the DGCCRF identified excessive price increases in certain restaurants, leading to substantial fines being levied against these establishments.

A recent high-profile example on this topic is the prosecutor raid conducted on DIOR, a company that contributes greatly to its country's reputation with its image of "Italian Quality" when luxury consumption is concerned. Discovered to be selling a bag for $2,780 that it had contract-manufactured for $57, the firm is currently undergoing rigorous inspection while suffering severe image loss. Most importantly, a trustee (court-appointed administrator) was assigned to the company. Naturally, while this situation urges everyone to be more reasonable and careful regarding pricing, it also restores the public's trust in their state.

Of course, there are inspections and punitive sanctions in our country as well. However, the size of fines, deterrence levels, and the absence of ongoing additional restrictions seem to weaken the impact, allowing volatile and unbalanced pricing to persist.

So, who bears the primary responsibility at this point?

Naturally, the greatest responsibility in this process falls upon the state. The state must establish price control mechanisms, tighten inspections, and implement deterrent sanctions against unfair price hikes. Businesses, on the other hand, should be fair and transparent in pricing and avoid undermining consumer trust. The public should also be sensitive to price increases, utilize complaint mechanisms when necessary, and exhibit conscious consumer behavior.

In some countries, there are also examples of citizens taking organized action against such issues. For instance, in France in 2020, some consumer associations and trade unions organized major protests against unfair price increases. In Italy in 2019, citizens organized via social media to boycott specific supermarket chains, expressing their reaction against price hikes. It seems high time that we as citizens engage in a systematic movement rather than merely complaining in street interviews.