Turkey on Thursday hiked consumer electricity prices and residential natural gas prices, which together could put upward pressure on inflation.
The country’s natural gas distributor BOTAŞ said it had raised natural gas prices for residential use by 12%, industrial use by 20% and for electricity production by 20.2%.
This marked the seventh increase in natural gas prices since January, according to the tariff released by BOTAŞ.
The move came shortly after the nation’s energy regulator Wednesday said it would hike consumer electricity prices as of July 1 in response to rising costs.
The prices have been hiked by 15% as of Thursday, said the Energy Market Regulatory Authority (EPDK).
The electricity prices have thus been increased by 122% over the last 3 1/2 years.
The electricity and natural gas price hikes together are expected to add some 0.6% percentage points directly to inflation.
The nation’s inflation has been stuck in double digits for most of the last four years.
It dipped unexpectedly to 16.59% in May, falling from a two-year high, after it had quickened to 17.14% in April.
Consumer inflation is expected to rise to 17% again in June, a Reuters poll showed Wednesday, after the unexpected dip in May when price hikes were delayed due to a full COVID-19 lockdown in the first half of the month.
For most of the year, the government has only modestly raised prices and taxes on items that would further fuel inflation.
Energy costs will impact all goods and services components of the inflation basket due to a pass-through effect, said Enver Erkan, chief economist at Tera Yatırım.
“We cannot expect a noteworthy fall in inflation for another several months,” he said.
There could be a decline in September or October due to a so-called base effect by risks remain due to producer prices, oil prices and a weak Turkish lira.
Oyak Securities said the price hikes would add 0.6 percentage points to the consumer price index, excluding any indirect impact.