The Turkish government has raised the minimum wage for the second time in six months.

After rising 50 percent on Jan. 1, the government has now raised it another 30 percent.

The monthly minimum wage is therefore 5500 lira, which corresponds to 312.75 euros.

With the increase, President Recep Tayyip Erdogan is reacting to the sharp rise in prices that has been going on for months.

Andreas Mihm

Business correspondent for Austria, Central and Eastern Europe and Turkey based in Vienna.

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In June they were 78.6 percent higher than in the previous year, the Turkish statistical office announced on Monday.

Driven by the Ukraine war, rising import costs for energy and food, and the weak lira, which has lost a fifth of its value since December, the inflation rate is at a level not seen since 1998.

Nevertheless, the officially measured amount is doubted by the opposition as too low.

Also, according to official data, the cost of transportation will increase by 124 percent, food by 94 percent and housing by 75 percent.

In a monthly comparison, prices rose by almost 5 percent, with an above-average increase in transport and housing.

The lira, which was last stabilized by government interventions and requirements for the currency exchange to companies, lost slightly to rates of 16.84 lira per dollar and 17.59 lira per euro.

Earlier, Erdogan had asserted that he had "never turned a blind eye to the problems our citizens experience in their daily lives due to exorbitant price increases and inflation."

However, inflation affects the whole world.

Many economists and bank analysts only agree with the analysis to a limited extent.

They see Turkey's extremely soft monetary policy, which has kept its key interest rate at 14 percent for months and has thus driven the real interest rate to minus 65 percent, as a crucial reason for the monetary policy misery.

Last week, Erdogan again announced that inflation would soon fall to a "reasonable" level by February-March 2023.

The central bank expected an inflation rate of 43 percent at the end of 2022.

Erdogan, who is standing again in the upcoming elections, promised that no one would be left helpless or hopeless.

The salaries of civil servants and pensions should be increased by 40 percent.

At the same time, unemployment benefits will be increased.

Expenditure in the state budget is increasing, and more than 90 billion lira (the equivalent of a good five billion euros) are lost due to tax exemptions on income.

To finance these expenses as well, the government had presented a supplementary budget of 880 billion lira (50 billion euros).

Erdogan wants to boost the economy with low interest rates.

This has side effects because the lira becomes less attractive for investors, the exchange rate falls and imports become more expensive.

Although exports rose to a record level in the first half of the year, the income is not sufficient to pay the higher import bill.

The current account deficit is increasing, and with it the need to raise more foreign exchange for financing.