Insight on Turkish economy

The Turkish economy is witnessing lately several setbacks, as the daily living cost in all aspect of life is increasing day by day.

In a new Turkish move that would increase prices and raise inflation rates in the country, which reached its highest levels in nearly a quarter of a century, the Turkish government decided to raise gas and electricity prices.

In conjunction with the new Turkish decision, the Turkish lira moved down, as it is still hovering near its lowest level ever, which it reached when inflation jumped to 36% levels last December.

The Turkish Energy Regulatory Authority (EPDK) said that it raised electricity prices for households by 20%, services by 30%, and those used in industry by 50%.

The Turkish authorities raised the prices of electricity and natural gas for households by 20% and about 50% for industry on Thursday, the first of September. 

This puts more upward pressure on inflation, which reached about 80% last July.

The utilities price hike is expected to push inflation up 0.8 percentage points. 

Higher industrial prices also indirectly increase inflation as producers reflect costs on consumers.

Botas, an energy importer in Türkiye, said it had raised the price of domestic natural gas. 

The increase was 20.4%, 47.6% for small industrial customers, and 50.8% for large industrial users.

The Turkish company Botas decided to increase the price of gas used to produce electricity by 49.5%, according to the company’s statement.

Despite the recent increases, the Turkish company confirmed in the statement that the Turkish government still subsidizes more than 80% of the prices of natural gas for households.

Domestic natural gas prices are up 174% this year. 

The increase in the prices of small and medium-sized industrial gases increased by 277%, and the prices of large industrial gases by 379%.

The lira is currently near levels of 18.20 liras, down by 0.2%, while the highest price against the dollar was recorded at 18.1845 liras.

The Turkish lira fell during last August’s trading by 2.3%. 

And that’s down from levels of 17.8 pounds dollars to levels of 18.2 pounds dollars at the end of trading last Wednesday.

The Turkish Federation of Trade Unions “TÜRK-İŞ” announced the data on poverty and hunger limits during the current month of August 2022.

The data was as follows:

The hunger limit for a family of 4, who wants to have a healthy and sufficient diet, is 6,889 TL. 

The per capita share should be approximately 1,722 TL, an increase of 25% over the minimum wage.

As for the poverty line for a family of four, it reached 22,442 Turkish liras. 

The per capita share should be approximately 5610 liras, which means an increase of more than 308% from the minimum wage.

The Turkish Federation of Trade Unions “TÜRK-İŞ” announced that the monthly cost of living for one employee amounted to 8 thousand and 999 Turkish liras, 64% more than the minimum wage.

A recent survey by the Statistics Regulatory Authority in Türkiye revealed that the participants expected the Turkish lira to reach a new record level this year, recording 19.65 lira to the dollar.

The Statistical Regulatory Authority of Türkiye conducted a survey among financiers, on the basis of which it published a survey of market participants’ expectations.

The respondents expected that inflation in Türkiye by the end of the year may reach 70.6% by the end of the year. 

While the Turkish Central Bank expects inflation to reach 60.4%, the bank has kept the interest rate at 14% for the past seven months, and that’s after it cut it by 500 basis points at the end of last year. 

In a series of cuts that led to a historic currency crisis and pushed inflation to its highest levels in 24 years.

Last month, the bank raised its year-end inflation forecast to 60.4%. 

This compares to the average expert estimate of 70%. 

The annual CPI is also expected to peak near 90% this fall.

Steve Hanke, an academic at Johns Hopkins University, said in a recent interview with Bloomberg. 

The annual inflation rate in Türkiye is by no means less than 132%.

According to our calculations at Hopkins, Hanke said, the Turkish government’s claims that Türkiye’s annual monetary inflation rate is 79.6% is far from true.

Hanke predicted that Erdogan would continue to fuel inflation with his baseless war with interest rates. 

Pointing out that Türkiye occupies the third place in the global inflation report for this week.

Official Turkish data showed that annual inflation accelerated to 79.6% last July. 

As well as from 78.6% last June. 

Istanbul witnessed a price growth of more than 99% in July compared to the previous year.