Soaring energy prices continue to cause headaches globally! - LEVENT YILMAZ

Soaring energy prices continue to cause headaches globally!

We have been discussing energy prices in Turkey for a while now. Of course, the most recent increase in prices directly impacts our lives and our increased energy expenditures carry a negative impact on our budgets. However, let’s not forget  that this is a global problem, and unfortunately Turkey, as a net energy importing country, is adversely affected by these global developments.


ENERGY TRIGGERS US INFLATION!


Two days ago, the U.S. inflation figure for January was announced. At 7.5%, It defied even the most pesimistic expectations. The general consensus was that the inflation would be around 7.3%. As has been the case for a long time, energy is one of the items that have the biggest impact on U.S. inflation. 


While the annual increase in the energy basket stood at 27%, the annual rate of increase in energy commodities hit 39.9%. Meanwhile, the annual increase in fuel prices currently stands at 40%. 


As electricity prices soared by 10.7%, energy service prices increased by 13.6%. Such a composition results in an appearance like the one below. In other words, inflation is mainly triggered by energy. This situation puts so much stress on average Americans that U.S. President Biden had to show enough interest in the issue to promiset that he will work extra hard to lower gas and energy prices.





THE ENERGY PRICES PICKLE IN THE EURO ZONE!


In January 2022, Eurozone inflation stood at 5.1% annually. When we look at the main items, the highest increase stems from energy with 28.6%. This figure was 25.9% in December 2021. So it has increased yet again. Speaking of December 2021, let me share a few more important bits of statistics.


(Eurostat)

In the 12-month period between December 2020 and December 2021, Euro Zone energy import prices shot up by 115%, while energy prices of in-regional industrial producers surged by 73%. The increase in consumer prices for “Electricity, gas and other fuels” has also hit 25%, despite the subsidies offered by many European countries. In the chart below, we see the course of these increases.


In a nutshell, it seems that the issue of energy prices is set to continue to cause headaches globally for a while. Turkey will get its share from this, just like the U.S. and the Eurozone. However, let's not forget that Turkey has recently diverged a bit due to the transitivity caused by the exchange rate debacle.

+

Cookies are used limited to the purposes in th e Personal Data Protection Law No.6698 and in accordance with the legislation. For detailed information, you can review our cookie policy.