Türkiye entered 2023 with a significant rise in its national minimum wage. As announced by president Erdoğan in the second half of December 2022, the Turkish minimum wage has been raised to 8,506.80 lira per month, starting from January 2023. This is an increase of 55% on the July 2022 level and double the rate from the start of 2022.
The wage increase comes amid soaring inflation in Türkiye. Türkiye’s inflation peaked in October at 85.5%, a 24-year high, but has since fallen to 64.3% in December. The decline is mainly due to a favorable base effect, as consumer prices were already rising rapidly at the same time last year. In December 2021, the annual rate of inflation reached 36% and rose by 13.6% month-on-month.
The soaring inflation has been fueled by a currency crisis, as the Turkish lira has plummeted against a basket of currencies amid the unorthodox low-interest rate monetary policy. Despite the soaring inflation, the Turkish Central Bank continues to slash interest rates, as Erdoğan continues to argue that slashing interest rates will boost domestic economic growth.