Turkey Imposes 6% Tax Hike on Fuel Despite Inflation Concerns
Turkey has imposed a 6% tax hike on fuel, despite concerns over the impact on inflation. The special consumption tax per litre for fuel has been increased by around 6%, according to a presidential decree published in the Official Gazette.
The special consumption tax on fuel is adjusted every six months based on the producer price index. With the 5-month cumulative PPI since the last increase standing at 7.12%, the latest tax hike is below the index. Authorities will announce an update on the PPI on January 3, when it is widely expected to increase.
Fuel taxes typically have a major impact on inflation. However, Finance Minister Mehmet Simsek said on Sunday that tax hikes for fuel and tobacco in the New Year will be set in a way that does not affect the country’s 2025 inflation outlook. Turkish annual inflation stood at 47.1% in November, higher than expected but at its lowest level since mid-2023. A Reuters poll forecast that it will ease to 26.5% by end-2025, but higher than a central bank prediction of 21%.