How will the tax increase affect the market and the market?

SAFAKNA, Türkiye. While the 8 percent value-added tax (VAT) rate on processed foods was increased to 10 percent, VAT on unprocessed staple foods remained unchanged at 1 percent.

However, rising costs, both from higher taxes on all other products and new record exchange rates, pushed up retail food prices.

According to Sözcü’s Gamze Bal news, Food Retailers Association board member Erdal Tufekci said recent events have created a 15-17 percent upward pressure on food prices with 1 percent VAT, as well as all retail products. ; He said that from today, citizens will begin to reflect the new price lists.

Added to this is the increase in the cost of gasoline and diesel fuel, which increased by 6-7 TL per liter after the increase in the Special Consumption Tax (SCT) levied on fuel.

Yuksel Krolik, president of the Turkish Carriers Federation, and Mustafa Carli, president of the Istanbul Food Wholesalers Association, noted that an increase in the cost of diesel from 26 Turkish Lira to 33 Turkish Lira would result in an increase of at least 20 percent. in the prices of fresh vegetables and fruits and dry food as of this week.

Diesel will hit the prices of vegetables and fruits

Rabbit said that the main factor determining the price of fresh vegetables and fruits is agricultural production, and according to information they received from the fields, there are no serious problems with the harvest this year, so prices for products that will increase production will also rise. let loose.

However, after the sharp increase in the SCT charged on fuel, the price of a liter of petrol and diesel increased by about 6-7 TL.

Rabbit drew attention to the fact that a liter of diesel fuel exceeding 33 lira, depending on the province, will cause a sharp increase not only in transportation costs, but also in costs at all stages of agricultural production, and said:

“Diesel is used not only for our transportation costs, but at every stage of agricultural production. Therefore, this situation, which will seriously affect costs, will inevitably lead to an increase in the price of vegetables and fruits.”

“I can’t say that tomatoes will rise in price from 3 lira to 5 lira, but there is no possibility that prices will not rise,” Rabbit said and said: diesel fuel by more than 20 percent, the price increase will also be at this rate.

Tensions prevail on the wholesale food side

Mustafa Karli, who pointed out that the event that will affect prices more than the 2 point increase in VAT rates is the increase in SCT on fuel, pointed to a 20 percent rate similar to Rabbit and said: “Transport is a major expense for us. . The rate of fuel increase also affects products sold at the same rate. New price transitions will also become known this week,” he said.

Profitable also said: “The tax rate on basic food products, which have a VAT of 1 percent, has not changed, but when the tax on all other products increased, prices also increased. New records in the exchange rate are as effective as tax increases. The offer is already limited. The current wholesale food situation is a bit tense,” he said.

“Taxes and the exchange rate will cause the highest inflation”

The increase in retail food prices is increasing not only due to higher tax rates, but also due to new record levels of the exchange rate and rising labor costs due to an interim increase in the minimum wage since July.

Erdal Tufekci, pointing out all these factors that also affect retail prices as they drive up costs, said: “We expect July to be the month with the highest inflation.”

On the other hand, according to news from Reuters, economists are expecting a 10% rise in the consumer price index in July due to higher tax rates after the elections and a fresh depreciation of the Turkish lira.

In addition, it is believed that the growth of the CPI at the end of the year from 50 to 60 percent is inevitable.