Turkey Hikes Energy Prices; Inflation Zooms To 30% In Dec. 2021

Inflation soared by the most in at least a decade in Turkey's biggest city Istanbul last month, according to data, and President Tayyip Erdogan's government sharply raised nationwide electricity and natural gas prices for the new year, Azra Ceylan and Jonathan Spicer reported for Reuters.

Photo Insert: A geothermal power plant in Turkey

Prices also jumped for gas, car insurance, and some bridge tolls, adding more strain to an economy facing surging inflation and a currency crisis that was triggered by a series of unorthodox interest rate cuts.

The Energy Market Regulatory Authority, citing high global energy inflation, said electricity prices were raised by as much as 125% for high-demand commercial users and by around 50% for lower-demand households for 2022. Natural gas prices jumped 25% for residential use and 50% for industrial use in January, national distributor BOTAS said. The price rise was 15% for power generators.

In Istanbul, home to around a fifth of Turkey's population of 84 million, retail prices jumped 9.65% month on month in December for an annual rise of 34.18%, the Istanbul Chamber of Commerce (ITO) said.

Home appliance prices were up by 20% while food rose by 15%. Wholesale prices in the city jumped 11.96% from November for an annual rise of 47.10%, ITO said.

The data and adjustments will probably stoke the country's overall annual inflation rate, which jumped above 21% in November and is seen surpassing 30% in December and heading higher still, largely due to a currency crash.

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

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