Why the central bank raised rates and your rent went up
Elif explains interest rates through one Istanbul flat: how a central bank decision reaches a landlord's mortgage, a tenant's rent, and a savings account, in that order.
Inflation, starting from a loaf
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Show notes
Inflation, starting from a loaf
A loaf of bread in Elif's neighbourhood costs almost twice what it did two years ago. She walks the price back from the bakery counter to the wheat field and the currency market to explain what inflation actually is.
- The baker's costs: flour, energy, rent, wages, and which rose fastest
- Why the mill buys wheat in dollars even when the farm is nearby
- Expectations: how prices rise because people expect them to
- What a central bank can and cannot do about bread
- The difference between inflation falling and prices falling
Next week: the bus fare, and why public transport prices are political.
Transcript
Hello, I am Elif Demirtaş and this is Why Bread Costs More, the show that explains the economy one purchase at a time. We are starting, naturally, with bread. The loaf I buy every morning from the bakery on my street costs almost double what it did two years ago, and the baker is not getting rich. So where did the money go. Today we follow that price backwards, from the counter to the flour, from the flour to the mill, from the mill to a wheat farmer who gets paid in a currency that keeps changing. Along the way we meet the strange idea that prices rise partly because everyone expects them to. And we ask what a central bank, sitting in a tower far from any bakery, can honestly do about a loaf. No graphs, I promise. You are listening on Witspeak Podcasts.
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