Energy prices continue to increase. State energy company BOTAS has raised the price of natural gas that will be sold to homes, industry, and power plants at different levels, while electricity tariffs have increased from 15% to 25%.
Natural gas used by the residential consumer group increased by 30% to TRY 3,265 per cubic meter in June, as compared to May. The price of gas for those who consume below 300,000 cubic meters annually has increased by 40% to TRY 4,688 per cubic meter while the gas price for those who consume above that figure annually has risen by 10% to TRY 10,417 per cubic meter in the manufacturing industry. Accordingly, the price hike in natural gas used by the industry will pave the way for a cost increase in energy-intensive industries such as the glass, petrochemistry, and iron-steel sectors.
Since Turkey almost fully imports natural gas, the surge in international prices that has continued for more than a year increased Turkey’s import bill. The direct and indirect impacts of the increase in tariffs on inflation are being closely followed. Moreover, tariffs are also being tracked in terms of public finance as the surge in import prices cannot be fully reflected on consumers and a considerable part of it is subsidized.
In line with the tariff set by the Energy Regulatory Authority (EPDK) and published in the Official Gazette yesterday, the electricity tariff implemented for the residential consumer group, which provides electricity from an authorized supply company, has been raised by 15%. The natural gas price consumed to generate power surged by 16.3% to TRY 12.5 per cubic meter. The price of electricity sold to the manufacturing industry and businesses raised by 25%.
The weight of natural gas and electricity is 1.55% and 2.32%, respectively, in the Consumer Price Index (CPI). The initial impacts of the surge in natural gas and electricity prices on the CPI are around 50 basis points and 35 basis points, respectively, according to calculations by three economists. However, the reflection on the CPI is expected to be higher than the initial impact as a result of indirect impacts and due to the fact that the price hike doesn’t just concern the residential consumer group.
Apart from the natural gas and electricity prices, the per liter prices of gasoline and diesel fuel have been increased by TRY 1.22, and TRY 1.04, respectively. Thus, the price of diesel fuel has reached TRY 24.41 per liter, while the price of gasoline and liquified petroleum gas (LPG) have amounted to TRY 25.02, and TRY 11.47, respectively in Istanbul. The hike in petroleum prices stems from the surge in oil prices and foreign exchange rates.
However, Turkey’s benchmark stock index saw a record high closing yesterday, while it climbed to an all-time high during trading hours. Borsa Istanbul closed at 2,568.76 points with a daily gain of 0.85%. Starting the day at 2,554.28 points, the index rose 21.67 points from Tuesday’s close of 2,547.09. Its total market value was more than TRY 2tr by market close, with a daily trading volume of almost TRY 42.7bn.
DAILY AGENDA
Trade Minister Mehmet Mus will announce foreign trade figures for May.
The Central Bank will release the summary of the Monetary Policy Committee meeting held on May 26 (2.00 p.m.).
The Banking Regulation and Supervision Agency (BDDK) and the Central Bank will release weekly monetary and banking statistics (2.30 p.m.).
Meanwhile…
>> Retail prices jumped 87.35% and wholesale prices climbed by 79.12% in Istanbul in May, year-over-year, according to the Istanbul Chamber of Commerce (ITO). The monthly surge in retail prices and wholesale prices was 5.84% and 5.76%, respectively, in May in the city.
>> Istanbul Chamber of Industry (ICI) Turkey Manufacturing Purchasing Managers Index (PMI) remained unchanged at 49.2 points in May.
>> The fertilizer company Ege Gubre has halted fertilizer production for an unknown period due to the uncertainty in fertilizer and fertilizer raw material prices in global markets, according to a statement from the company.
>> NATO Secretary-General Jens Stoltenberg said Turkey is an important ally of NATO and all NATO members are ready to sit around the table to discuss Turkey’s concerns, including the PKK threat.
>> Ahlatci Holding, which operates in the gold, energy, health, finance, automotive, and real estate sectors, will set up a USD 100m powder mill, according to Ahmet Ahlatci, Chairman of the Board of Directors of Ahlatci Holding.
>> Turkish airports served more than 128.3 million passengers in 2021, according to the State Airports Authority General Directorate (DHMI). The figure is a 57% increase from the 81.7 million recorded in 2020. Almost 68.5 million passengers flew domestically, while 59.7 million were on international flights.
>> Credit card expenditures rose by 119.2% to TRY 64.05bn as of May 20 on an annual basis, according to the Central Bank.
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