Turkey’s energy regulator has raised electricity prices by 14 percent for industrial use and 9 percent for residential use for the second straight month, according to official figures, a move likely to further feed double-digit inflation.
The increases, published in the government’s Official Gazette overnight, went to into effect from Saturday. The hikes reflect the impact of Turkey’s currency crisis, which has seen the lira fall some 42 percent this year and driven up the cost of natural gas imports.
Almost a third of Turkey’s total 293 billion megawatt power production came from natural gas power plants in 2017.
Initially sparked by worries about President Tayyip Erdogan’s influence on the central bank, the lira sell-off has worsened over a rift with Washington over an American evangelical Christian pastor detained in Turkey on terrorism charges.
Erdogan, a self-described “enemy of interest rates”, wants to see lower borrowing costs to keep credit flowing, particularly to the construction sector. Investors, who see the economy heading for a hard landing, want to see decisive interest rate hikes to rein in inflation.