2024-01-03 09:41:59
Inflation in Turkey, which was already very high, continued to rise in December. Consumer prices increased by 64.77 percent compared to the same month last year, the statistics office announced on Wednesday. In November the inflation rate was 61.98 percent.
Rising prices in hotels and restaurants in particular fueled inflation before the turn of the year. The weakness of the local currency, the lira, also contributes to this: it depreciated by 37 percent against the dollar last year alone, making imports more expensive. The central bank has raised its key interest rate from 8.50 to 42.50 percent in 2023 to curb high inflation, so far with little success.
According to experts, there is a risk of a new wave of inflation following the unexpectedly large increase in the minimum wage. “Prices will increase by at least 25 to 30 percent,” said Berke Icten, chairman of the Turkish Shoe Manufacturers Association. Labor Minister Vedat Isikhan had announced that the monthly minimum wage would rise to 17,002 lira (519 euros) in the new year. This represents an increase of 49 percent compared to the level set in July. Compared to January 2023, it has even doubled. Around seven million Turks will benefit from the higher wage floor.
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Because of high inflation and the weak lira, the government has increased the minimum wage every six months for the past two years. Employers do receive support to mitigate the consequences. However, this is lower than expected, explained business associations.
The increase will have a “significant impact on inflation,” said an economist who spoke on condition of anonymity. The inflation rate could reach around 70 percent in the first half of 2024. Despite the significant increase, the minimum wage would fall after adjusting for inflation if there was no further increase in the middle of the year.
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