Minimum wage’s impact on inflation to be limited: Kavcıoğlu

Minimum wage’s impact on inflation to be limited: Kavcıoğlu

Minimum wage’s impact on inflation to be limited: Kavcıoğlu

Central Bank Governor Şahap Kavcıoğlu has said he does not expect the new minimum wage to have significant adverse effects on inflation and prices.

The hike in the minimum wage did not have a direct impact on inflation in the past, he said in a speech he delivered at a gathering in Istanbul.

“In the past, in some years, inflation remained low despite higher minimum wage. This time around, I do not think a hike in minimum wage will have strong adverse effects on inflation,” Kavcıoğlu said.

The commission, which includes representatives from the government, the largest workers’ union and the confederation of employers, held its first meeting this week to discuss the increase in the minimum wage to take effect in 2023.

The workers union, Türk-İş, says the new minimum wage should be at least 7,785 Turkish Liras, which the union calculated as the hunger threshold for a family of four. The commission’s next meeting is scheduled for Dec. 14.

Inflation eased as expected in November, Kavcığlu said, adding that due to the base effects, the decline in inflation will slip significantly in December and January 2023.

“Both energy and transport prices, as well as the prices of core goods, declined in November. Apart from the base effect, the factors, which affect inflation, have waned,” the governor added.

With the measures the government has taken, food prices will also decline, Kavcığlu said.

He also mentioned the stability in FX rates and the decline in commercial loan costs as other factors contributing to the improvement in the inflation outlook.