Turkey raises wholesale gas prices by 50% for industrial plants and 35% for households, another blow to consumers and businesses suffering from dizzying inflation, according to ahvalnews.com .
The cost of gas for electricity generation also rose by 44.3%, state-owned pipeline company BOTAŞ said late Thursday.
Consumer price inflation in Turkey jumped to 54.4% in February, the highest level in two decades, and is expected to accelerate further in March, when the war in Ukraine sparked rising oil and gas costs. Turkey imports almost all of the oil and gas it consumes, which makes its economy vulnerable to price fluctuations.
In early January, BOTAŞ announced a gas price increase of between 15 and 50 percent. The Energy Market Regulatory Authority (EPDK) introduced price increases of between 52% and 130% for electricity in the same month, sparking protests by businessmen and the leader of Turkey’s main opposition party saying he was refusing to pay his bill.
Turkish President Recep Tayyip Erdogan approved a 50 per cent pay rise in December to help mitigate the effects of accelerating price increases on the poorest sections of Turkish society. It faces elections until June 2023. Erdogan’s unconventional fiscal policies, which include the central bank’s mandate to cut interest rates, have exacerbated Turkey’s economic woes and pushed up inflation.
Erdogan tried to soften media speculation about a further increase in the minimum wage in a statement on Thursday.
The Central Bank of Turkey has been forced to finance BOTAŞ in foreign currency for the gas market, negatively affecting the bank’s already depleted reserves, which it has spent on defending the fragile pound. It sold $ 4.1 billion to BOTAŞ in January and $ 6.1 billion in 2021, according to local press reports.
The economic impact on the economy from the spike in energy prices has been exacerbated by losses for the pound. The currency collapsed 44% against the dollar last year and has fallen 10% further in 2022.
Consumer price inflation in Turkey is expected to accelerate to more than 60 percent in March, according to a Reuters poll published on Monday. The Turkish Statistical Institute will publish the data on Monday. Producer price inflation in the country reached 105 percent in February.
The Turkish lira traded slightly higher at $ 14.68 on Friday. At the beginning of last April, it was valued at 8.25 against the US currency.
Source: Capital
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