Gas prices surge for homes and businesses
In a move that could impact household budgets and industrial production costs, the Energy Market Regulatory Authority (EPDK) in Turkey announced an increase in natural gas prices, effective from July 2, 2021. The increase, which averages 24.6% for residential users and 7.86% for industrial users, was primarily due to adjustments in state energy company BOTAŞ's pricing [1].
The potential impacts of this price hike are significant. For residential consumers, a substantial rise in natural gas costs is anticipated, adding pressure to household energy bills. For industrial users, the smaller but still notable increase is expected to raise production costs dependent on natural gas.
Economists, polled by the state-run Anadolu Agency, forecasted that this price adjustment could contribute approximately 0.5 percentage points to monthly inflation. This could potentially be visible in upcoming consumer price index readings for July and beyond [1].
As it stands, Turkey is experiencing a relatively high inflation environment. Although the annual inflation rate dropped to 35.4% in May, it is expected to remain elevated. The gas price hike, therefore, is seen as a factor that could sustain inflationary pressures in the short term [1].
It is important to note that the June inflation data will be released after the new natural gas prices took effect on July 2, and the forecasted inflation rates do not include the potential impact of the 7.86% rise in natural gas prices for industrial users. The actual inflation figures, which will be released by the Turkish Statistical Institute (TÜİK) on July 3, will provide a clearer picture of the impact of the price increase [1].
The authority stated that the natural gas price hike was in line with budget targets. The new tariffs were made according to the wholesale prices announced on the BOTAŞ website [1]. However, it is worth mentioning that the forecasted inflation rates are estimates made by economists and may not accurately reflect the final inflation figures.
In summary, the EPDK's decision to raise gas prices was linked to adjustments in wholesale gas procurement costs and was expected to have a modest but noticeable inflationary impact on both residential and industrial energy consumers in Turkey mid-2021 [1]. As we await the official inflation data, the question remains whether this price hike will contribute significantly to Turkey's ongoing battle against high inflation.
[1] References: Anadolu Agency, Turkish Statistical Institute (TÜİK), Energy Market Regulatory Authority (EPDK), and BOTAŞ.
The modest yet noticeable gas price hike for industrial users may influence the financing of energy-dependent industries in Turkey. The substantially higher natural gas costs for residential consumers could potentially affect the financial sector, as households strive to meet increased energy expenses.
