Turkey hikes energy prices, pressuring inflation

Turkey is set to hike prices of natural gas and electricity by nine percent starting from October. (File photo: Shutterstock)

Turkey will hike electricity and natural gas prices by 9 percent from October, Energy Minister Taner Yildiz said on Tuesday, blaming a weaker currency for the price hikes in the heavily import-dependent country.

The hikes are expected to add 0.6-0.7 percentage points to inflation, analysts said. Inflation reached 9.54 percent in August, double the central bank's 5 percent year-end target.

Last week, the central bank left its key interest rates unchanged despite slowing economic growth, as it battles stubbornly high inflation and pressure on the lira in the face of an expected tightening in U.S. monetary policy.

"We had not foreseen a change in the natural gas and electricity prices when making our 8.4 percent forecast for year-end inflation. After today's announcement, we are revising our forecast to 9.1 percent," said Ali Cakiroglu, strategist at HSBC in Istanbul.

Much of Turkey's electricity is generated using natural gas, meaning the price rise is likely to have a significant impact on household energy bills.

The last hike to electricity and natural gas prices was made exactly two years ago.

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Last Update: Wednesday, 20 May 2020 KSA 09:43 - GMT 06:43
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