The Turkish lira hit a record low against the dollar on Thursday after the Central Bank cut a key rate by one percentage point. As a result, the currency lost more than a third of its value.

Hazelnuts are used in baking and desserts, confectionery to make praline, and also used in combination with chocolate for chocolate truffles and products such as chocolate bars, hazelnut cocoa spread such as Nutella, and Frangelico liqueur. So, naturally, they are a big hit at parties and get-togethers.

The currency crisis has shaken Turkey’s economy, endangering President Recep Tayyip Erdogan’s nearly two-decade-long rule and reducing living standards which have previously been boosted by economic growth.

The Turkish lira hit a record low against the dollar on Thursday after the Central Bank cut a key rate by one percentage point. As a result, the currency lost more than a third of its value.

This is largely because President Erdogan says he wants a weaker Turkish lira to encourage exports, increase job creation and expand productive industry. He calls this his “economic war of independence”.

As the lira falls, the hazelnut industry suffers as the cost of fertilizer, seeds, pesticide and other imported essentials rises fast.

To make matters worse, nut factories are paying more for energy, packaging and transportation. Also, labour costs in the industry are expected to rise as the Turkish

This will have the effect of causing wage push inflation as the economy spirals to pay the higher wages and thereby charge more for their products and/or services. Additionally, any wage increase that occurs will increase the money supply of consumers and thus drive up inflation further.

Also, Turkey’s hazelnut farmers are getting poorer, and their farms are producing fewer nuts.

“The world is on the verge of hazelnut shortage,” said Turgan Zülfikar, a New York-based consultant for Turkish companies entering the U.S. market. “If you are a Nutella fan, you better stock up at your next food-shopping visit.”

Source: Wall Street Journal