Turkish authorities drastically hiked energy prices as the nation’s inflation crisis worsens.
As of last month, the Turkish lira has lost 50% of its value against the dollar compared to the previous year’s levels — meaning that citizens are faced with diminishing purchasing power and continuous price uncertainty.
President Recep Tayyip Erdogan’s government therefore raised energy prices, according to Reuters:
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 more than 20% while food rose nearly 15%. Wholesale prices in the city jumped 11.96% from November for an annual rise of 47.10%, ITO said.
As Nikkei Asia recently reported, Turkey is also scrambling to address the crisis through new lira-based financial products:
Along with new proposals to encourage Turkish households to exchange physical gold stashed under mattresses for certified gold products, the measures are designed to inject fresh blood into the financial system and arrest the depreciation of the local currency.
Goksel Asan, head of finance in the office of President Recep Tayyip Erdogan, said in an interview Friday that the government is working on various new financial products to put the nation back on track economically and ultimately reach its stated goal of a current-account surplus.
As protests unfold in Turkey, officials are seeking to quash dissent. After Turkish leadership warned that they would crack down on online “disinformation,” several Turkish YouTubers were arrested for interviewing citizens about the nation’s currency crisis. For instance, Hasan Köksoy — who runs the YouTube channel Kendine Muhabir — said in a tweet translated into English that he was taken from his bed “like a terrorist” and arrested “for handing a microphone to the public.”
The crisis in Turkey occurs as similar economic calamities play out in nearby Lebanon, which is experiencing hyperinflation and inconsistent power supplies. According to the World Bank, Lebanon may be witnessing one of the planet’s worst economic depressions since the nineteenth century.
Meanwhile, rising inflation in the United States is prompting action from the Federal Reserve. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index — which the central bank uses to inform monetary policy decisions — hit a year-over-year rate of 4.1% in October. More recently, the Bureau of Labor Statistics said that the Consumer Price Index is rising at a 6.8% clip — the largest year-over-year increase since June 1982.
In January of last year, inflation in the United States was 1.4%.