The Impact of Fuel Price Increases on Inflation Should Be Limited

Economist Prof. Dr. Hakkı Hakan Yılmaz drew attention to the pressure exerted by rising fuel prices on inflation, calling for the zeroing of the Special Consumption Tax (SCT), a reduction in the Value-Added Tax (VAT), and an increase in social support until the end of the year.

Fuel Price Increases and Their Impact on Inflation

Economist Hakkı Hakan Yılmaz emphasized that increases in fuel prices not only directly drive up input costs but also pull secondary prices higher.

It was calculated that as of September, the direct contribution of price hikes in diesel and gasoline to inflation in the January-September period was 1.69, and together with secondary prices, it stood at 7.6 percent.

Proposals for SCT and VAT Until the End of the Year

Yılmaz stated that the SCT should be zeroed until the end of the year to prevent a deterioration in pricing behavior.

It was proposed that the VAT, which is 20 percent depending on areas of use such as agriculture and industry, be lowered to 10 percent, and social supports be increased.

Year-End Inflation Expectation and Risks

It was recalled that increases in energy prices also affect other products such as electricity and natural gas.

It was stated that inflation could exceed the 28.4 percent projection in the Medium-Term Program, reaching a band of 31-32 percent by the end of the year.