Turkey cancels tobacco, alcohol price hikes after freeze in power costs

Turkey cancelled an automatic increase in the price of tobacco and alcohol due to be implemented early next year.

The government will not carry out the hikes in the first half of 2020, according to a presidential decree published in the Official Gazette on Tuesday. The increases are normally made in line with producer price inflation.

The announcement follows a similar decision to delay increases in the price of electricity. Power prices will be frozen for the first three months of 2020, the energy market regulator said last week.

Many Turks have seen their spending power slashed by a currency crisis in August 2018 that heralded a sharp economic downturn, higher inflation and a surge in unemployment.

The decision to delay the price hikes for next year may increase speculation that the government may be planning early presidential or parliamentary elections. President Recep Tayyip Erdogan said in a New Year message on Tuesday that he would serve his full term until 2023.

Over three million people were unable to pay their electricity bills in 2019, Energy and Natural Resources Minister Fatih Dönmez said in answer to a question posed by an opposition party in parliament two weeks ago, according to local media.

Delays to the price hikes may pressure the government’s budget finances at a time when it has pledged to curb spending to meet year-end goals.