Private sector agrees 10% price cuts as Turkey steps up inflation fight

ISTANBUL — Turkey's private sector has agreed to cut prices on its goods by at least 10 per cent across the board, Finance Minister Berat Albayrak said on Tuesday, as he called on businesses to join a national struggle to tame soaring inflation.

Berat Albayrak, Turkey’s finance minister, rolled out the measures as part of a "fully fledged fight" against inflation.

The announcement appeared to leave financial markets cold, however. The lira weakened slightly as he spoke in Istanbul and was at 6.1484 at 11:57 GMT, a touch weaker on the day.

The currency has fallen some 40 per cent this year, driving up the price of everything from food to fuel and eroding confidence in what was once a high-flying emerging market. The sell-off has been sparked by deep concern about Erdogan's influence over monetary policy. 

Investors have said that more interest rate increases, and orthodox policy measures, are needed to rein in inflation, which last month hit its highest in 15 years at nearly 25 per cent.

"The fight against inflation and for price stability is not a fight that can be conducted by the state and institutions alone," Albayrak said. 

The voluntary discount would be reflected in all the goods that make up Turkey's inflation basket, and prices would be lowered by a minimum 10 per cent until the end of the year, he said.

The programme also included a freeze on energy prices until year-end and an acceleration of VAT rebates.

It was not immediately clear how many goods would ultimately be impacted, or how many companies would take part, but Albayrak called on the public to support those that did push through the price cuts.

Erdogan has called on Turks to report unusual price hikes in shops, saying it was the government's responsibility to raid the inventories of stores if necessary.

The trade ministry said on Monday it had asked more than 100 companies to explain what it says were excessive price increases of goods, in a probe into suspected price gouging after it inspected more than 69,000 products at nearly 4,000 companies.

As the currency crisis deepened in August, the government made it illegal for companies to arbitrarily impose price increases if they were not impacted by a rise in input costs or the exchange rate.