Inflation to rise in January due to minimum wage hike, Turkish Central Bank states

Turkey’s Central Bank stated that January inflation would increase due to the effect of the recent hike in the minimum wage, according to the summary of the last monetary policy committee meeting.

Duvar English

Turkey’s Central Bank expected inflation to increase due to the minimum wage hike that will be implemented in January 2024, according to the summary of the Monetary Policy Committee meeting on Dec. 21. 

The Committee stated that monthly inflation would rise in January due to wage adjustments, particularly the minimum wage, and items with a high tendency to set time-dependent prices.

The bank added, "This rise in monthly inflation, which is also reflected in the Inflation Report forecasts, is expected to slow down in February and beyond, and hover close to the decline in the underlying trend of inflation in the first half of the year.”

Central Bank has previously estimated its year-end inflation projections for 2023 and 2024 to be 65% and 36% respectively. The disinflation would start after it peaked at around 70%-75% in May 2024, according to the bank.

Consumer prices rose 3.28% in November, and annual inflation increased 0.62 percentage points to 62.0%. 

As the government’s ongoing project of providing free natural gas for the first 25 cubic meters to curb inflation indicators began to fail with the increase of consumption during winter months, it is expected that the inflation rate will be affected by this trend as well.

Contributions of subgroups to annual inflation rose from 1.74 percentage points to 3.13 percentage points in the energy group in November, according to Central Bank data.

Turkish government on Dec. 27 announced that the minimum wage would be increased by 49.5% to 17,002 liras ($578) for 2024.