Massive price hikes on electricity and other energy items have dominated Turkey’s public agenda for weeks, aggravating costs in an economy that was already grappling with soaring inflation fueled by the sharp depreciation of the Turkish lira.

Households were hit by gas and electricity hikes of up to 127% at the turn of the year, while the industry has faced even higher energy hikes, reaching up to 400% over a year. The skyrocketing costs of the industry are reflected in the big gap between producer and consumer inflations, which climbed respectively to 93.5% and 48.7% in January.

In 2021, gas prices for industrial users were raised by 1% each month in the first half of the year, followed by hikes of 20% in July, 15% in both September and October, 48% in November and another 20% in December. Coming atop was a 50% hike as of Jan. 1. As a result, producers now pay about 6,300 Turkish liras per 1,000 cubic meters of gas, up from about 1,400 liras in January 2021. As for electricity prices, industrial enterprises saw a hike of 22% in July, followed by hikes of 52% to 130% as of Jan. 1.

The government has blamed the price increases on the global energy crunch, but the added impact of Ankara’s economic policies is beyond question, hence the whopping scale of the hikes. Under pressure from President Recep Tayyip Erdogan, who holds the unorthodox view that high interest rates cause high inflation, the central bank lowered its policy rate by 500 basis points in the last four months of 2021, doing the opposite of what conventional economic theory prescribes to fight inflation. The cuts fueled the slump of the lira, which lost more than 40% of its value against the dollar last year.