Türkiye issued a fresh hike in electricity and natural gas prices for households and industry as of Thursday, authorities said, which will further pressure inflation.
Electricity and gas prices for households have increased by around 20% and by about 50% for the industry as of Sept. 1, the Energy Market Regulatory Authority (EPDK) and state energy importer BOTAŞ said on Thursday.
The utility price hikes are expected to push inflation up by 0.8 percentage points, according to a Reuters calculation, while higher industrial prices also lead to an indirect increase in inflation as producers reflect the costs on to consumers.
The energy regulator said it had raised household electricity prices by 20%, those used by public and services sectors by 30% and those used in the industry by 50%.
BOTAŞ said it hiked the natural gas price for domestic use by 20.4%, by 47.6% for small to medium-scale industrial customers, and by 50.8% for large industrial users.
The price of gas used for electricity production was raised by 49.5%, BOTAŞ said.
Both bodies cited the conflict in Ukraine and global developments, including the COVID-19 pandemic, as reasons for the hikes.
Türkiye is almost completely dependent on imports to cover its energy needs, which leaves it vulnerable to rising costs that skyrocketed following Russia’s invasion of Ukraine, and domestic demand has risen since the pandemic.
The rise in global energy prices this year, as well as the decline in the Turkish lira have stoked prices domestically.
Türkiye’s annual inflation reached nearly 80% in July, a 24-year high. But the increase turned out to be smaller than in previous months, signaling that price pressure might be slowing.
Economists have suggested inflation may be approaching a peak, with energy inflation falling sharply and food inflation appearing close to topping out.
The government has said inflation will fall with its economic program prioritizing low-interest rates to boost production and exports with the aim of achieving a current account surplus.
President Recep Tayyip Erdoğan has said that he expects inflation to come down to “appropriate” levels by February-March next year, asking for the public to show patience.
Finance Minister Nebati earlier this month also said the inflation rate would enter a sharp downward trend as of December due to favorable so-called base effects and the fall will continue throughout 2023.
The Central Bank of the Republic of Türkiye (CBRT) last month raised its year-end inflation forecast to 60.4% and saw it peaking near 90% in the autumn.
Household natural gas prices have been hiked 174% this year, small to medium-scale industrial gas prices were raised 277% and large industrial prices by 379%.
The state still subsidizes over 80% of natural gas prices for households, BOTAŞ said on Thursday.
Last year, 45% of the gas used in the country came from Russia and the rest from Iran and Azerbaijan. Türkiye’s annual gas consumption rose from 48 billion cubic meters (bcm) in 2020 to a record 60 bcm in 2021 and is expected to reach 62 bcm to 63 bcm this year, according to official figures.