Canan Yüksel Yücel is an Economist at the CBRT.
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The food group is the most important sub-item of the CPI in terms of price stability due to its considerable weight in the consumer basket as well as the high rate of increases and volatility in food prices.
Both the level and volatility of food price inflation are high. The food price index has remained higher than the CPI over the last decade . A study by Fethi Öğünç, “Volatility of Unprocessed Food Inflation in Turkey: A Review of the Current Situation”, published as a part of the CBRT Research Notes in Economics in 2010, shows that among CPI sub-items, the unprocessed food group displays the highest volatility. The study also indicates that the extent of volatility in this group is markedly higher than that in EU countries. Another CBRT Research Note by Fatih Akçelik and Canan Yüksel Yücel, “Food Prices In Turkey: An International Comparison”, published in 2016, also confirms that the high volatility in food prices has prevailed during the 2010-2016 period too.
As a result, the adverse effects of food price hikes and high volatility on consumer inflation necessitate the close monitoring of food and agricultural product markets. Accordingly, an “Evaluation Committee” (the Committee) was established on 9 December 2014. The Committee has, so far, analyzed several products, primarily red meat, and discussed the required measures to be taken. Various agricultural products have been subjected to an examination and inspection, and external trade measures have been evaluated. Cost margin analyses have been conducted for red meat, tea, hazelnuts, olive oil, bread and various fresh fruits and vegetables. Along with monitoring and evaluation, the Committee also performs studies geared towards structural issues.
In order to offset the supply shortage in red meat and to improve the quality of livestock in Turkey, a series of studies are being conducted by the Ministry of Food, Agriculture and Livestock. The measures taken, in particular those regarding import of livestock, have recently moderated the uptrend in prices.
Actions taken by the Committee set an invaluable precedent for the joint effort of institutions to achieve lasting price stability in Turkey. Rendering these acquisitions permanent, focusing more on structural issues by deepening the efforts and thereby pulling food-related inflation down to levels consistent with the inflation target are of great significance. The Committee has put forth detailed solution proposals on a product basis, which is an important step taken to this end.
Quoted from Inflation Report 2016-III, Box 3-1.