Turkey raises electricity and natural gas prices; inflation in Istanbul is the highest in the last decade

Inflation in Turkey’s largest city, Istanbul, jumped the most in at least a decade last month, according to data Saturday, and President Tayyip Erdogan’s government has sharply raised electricity and natural gas prices across the country for the new year.

Prices also jumped for petrol, car insurance and some tolls, further straining the economy in the face of rising inflation and a currency crisis triggered by a series of unorthodox interest rate cuts.

The energy market regulator, citing high global energy inflation, said electricity prices had risen by as much as 125 percent for high-demand commercial customers and about 50 percent for lower-demand households by 2022.

Natural gas prices jumped 25% for residential use and 50% for industrial use in January, national distributor BOTAS said. The price increase for generators was 15%.

In Istanbul, home to about a fifth of Turkey’s 84 million people, retail prices jumped 9.65% a month in December, with annual growth of 34.18%, the Istanbul Chamber of Commerce (ITO) said. Home appliance prices have risen by more than 20 percent, while food has risen by almost 15 percent.

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Wholesale prices in the city jumped 11.96 percent compared to November, with annual growth of 47.10 percent, the ITO said.

Data and adjustments are likely to boost the country’s overall annual inflation rate, which jumped above 21% in November and exceed 30% in December and continue to rise, largely due to a currency crash.

The lira fell 44% of its value against the dollar last year after falling since September, when the central bank, under pressure from Erdogan, began a series of aggressive interest rate cuts.

Other adjustments included a 20% jump in the cost of compulsory vehicle insurance for those with the highest deductibles.

Gasoline prices rose by more than half a lira per liter, while diesel prices rose by 1.29 lira, the Union of Employers of Energy, Oil and Gas Stations (EPGIS) said on Friday.

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