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Cambridge Econometrics 3 Fossil fuel prices and inflation in Türkiye Energy prices and inflation in Türkiye The world is experiencing a surge in the cost of living and corresponding inflation levels, mostly attributed to supply-side factors. [...] Increasing the share of coal and decreasing the importance of natural gas in electricity production is a component of the government’s strategy to diversify Türkiye’s energy imports. [...] Retail are important energy and transport fuel prices are a component of the consumer prices drivers of the index (CPI), and generally account for around 10% of the overall basket of recent consumer goods and services included in the CPI (gas and fuels account for around 7% price inflation and electricity for around 3%). [...] After the jump in January 2022, caused by a significant rise in domestic tariffs, the contribution of electricity prices to the overall rate of inflation remained stable and close to its share in the inflationary basket: around 2-3% since March 2022, down from 4.5% in January. [...] The cost of these subsidies is estimated to reach 300 billion liras ($16bn) in 2022, equivalent to roughly 2% of GDP, and the size of subsidies is planned to double in 2023 as part of the next budget.