Turkish Raki, Price Rises and Currency Highs

In the past week bootlegged raki has killed at least 15 people in Turkey. This has lead to a massive recall of all the current authentic raki bottles on the market to be replaced by bottles with different colour caps.

The motivation to produce illegal raki is fairly easy to find. Recently, the tax on a bottle of raki went up again. Now a 700 ml bottle costs 22.5 YTL (almost US$18 at today’s rate), 65% of which is tax. For a poor country this is a lot of money.

Raki is not the only product or service to have a recent price rise. Other rises I have personally experienced:
* My last haircut (without a wash) at local hairdresser cost 5 YTL, whereas the previous one, including a wash, was 4.5.
* The cost to dry clean a pair of pants has risen from 3.0 to 3.5 YTL.
* A return Mersin-Adana train trip is now 5.0 YTL, up from 3.5. When I bought my ticket Saturday I gave a 5-lira note and waited, expecting to receive change…

In Turkey’s hyperinflation past, regular and large price increases were the norm as the lira was always losing value (see table 2/3 down page). Correspondingly, wages also rose. However, in the past 2 or 3 years, both inflation and the lira value have stabilised. In fact, the Turkish lira is at its strongest against the USD since July 2001. This financial stability has helped keep salaries in check.

Stable salaries and rising prices result in a squeeze, causing people to either modify their purchases or go without. For an essential like raki, many people and restaurants decided to buy cheaper, for going without was not an option…

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