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Turkey hikes gas prices, as inflation tops 60% in March

Turkish state-owned energy importer BOTAS said it had raised natural gas prices for industrial facilities by 50 percent and those for households by 35 percent, raising the prospect of further stoking inflation, which is expected to top 60 percent in March.

BOTAS also said natural gas prices for electricity production were going up by 44.3 percent as of April 1. It cited the global rise in energy prices as the reason for the hikes.

Turkey imports almost all of its energy needs, leaving it vulnerable to big price swings. Its energy costs started rising in September and surged 212 percent year-on-year in the first two months of 2022 to $16.8 billion, government data showed.

BOTAS’ purchases of foreign currencies from the central bank have hit record highs in recent months due to soaring energy prices.

Economists calculate the hike to household natural gas prices will raise inflation by 55 basis points. The secondary impact of the increase in industrial natural gas prices raise the consumer price index by more than 55 basis points.

Turkey’s consumer inflation, at 54.4 percent in February, has soared mainly due to the lira’s 44 percent decline against the dollar last year. The depreciation steepened after a series of rate cuts from the central bank, long sought by President Tayyip Erdogan.

Recently boosted by rising commodity prices due to Russia’s invasion of Ukraine, inflation in Turkey is expected to hit 61.5 percent in March, a Reuters poll found. It is seen dropping to 52.2 percent by the end of the year.