Turkey boosted gas and energy prices on Wednesday, and its energy importer spoke of a “perfect storm” on world markets, fueling an inflation boom in the country that probably reached a 24-year high last month.
Turkey imports almost all of its energy needs, leaving it vulnerable to sharp price increases this year, while rising global energy costs have risen sharply in recent months.
Inflation of at least 70% and the weakness of the pound have become a major headache for President Recep Tayyip Erdogan in the run-up to the mid-2023 elections, with opinion polls showing declining support for him and his ruling AKP party. due to financial pressures.
Gas prices rose by 30% for households, by 16.3% for gas used in electricity generation and by 10.2% for natural gas used in industry, said state energy importer BOTAS.
This follows a 35% increase in household gas prices imposed in April.
“The public is well aware that with the impact of the perfect storm on the global and European energy markets, consumers have been left exposed to huge energy prices,” BOTAS said.
He said global price increases had not been passed on to Turkish consumers at the same level and the latest increases were designed to keep the impact on consumers to a minimum.
Separately, the energy market regulator (EPDK) increased electricity prices between 15% and 25%, according to the Government Gazette.
Annual inflation reached 70% in April and in May the data are expected on Friday. It is expected to have risen to 76.55% due to high energy and food prices and the weakening pound, with the forecast for the end of the year at 63.5%, according to a Reuters poll.
The pound remained stable at 16.4275 at 07:57 GMT, having weakened by 20% this year, in addition to the 44% slide in 2021 after a series of unorthodox interest rate cuts sought by Erdogan.
Wednesday’s data showed that Turkish manufacturing shrank for a third straight month in May, as both production and orders slowed amid falling demand and continued price pressures.
Rising gas prices initially appeared to push the Consumer Price Index (CPI) upwards by 50 basis points and the increase in the price of electricity was thought to have contributed by 35 basis points, according to estimates by three economists. Natural gas weighs 1.55% on the CPI, while electricity weighs 2.32%.
Source: Capital
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