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Turkey raises minimum wage by 34 percent to address inflation

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Turkey raised monthly minimum wage by another 34 percent beginning on July 1, the government said on Tuesday, bringing it to a net 11,402 lira ($483) for the second half of the year in an effort to address soaring inflation, Reuters reported.

“The minimum wage assessment commission completed its work with an agreement between the workers and employers,” Labor Minister Vedat Işıkhan said in announcing the decision.

Inflation is well above the official 5 percent target and touched a 24-year peak of 85.5 percent in October, prompting Ankara to raise the minimum wage by 100 percent over the course of last year.

Annual inflation dipped to 39.6 percent in May as the government provided natural gas free of charge, offsetting price rises in other goods.

The cost-of-living crisis was largely brought on by an unorthodox policy of slashing interest rates despite rising prices, which stoked a late-2021 currency crisis. The lira has shed another 21 percent so far this year, mostly after May elections.

However, re-elected President Recep Tayyip Erdoğan has signaled he is ready to pivot to rate hikes after appointing Mehmet Şimşek as finance minister and Hafize Gaye Erkan as central bank governor.

The central bank is holding its policy-setting meeting on Thursday and is expected to start ramping up its rate from 8.5 percent currently.

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