Turkey raised natural gas and power prices on Wednesday and its energy importer blamed a "perfect storm" in global markets, feeding into an inflationary surge in the country that likely hit a 24-year high last month.

Turkey imports virtually all of its energy needs, leaving it vulnerable to the big price rises seen this year, and soaring world energy costs in recent months sharply raised the import bill.

Overall inflation of at least 70% and lira weakness have become a major headache for President Tayyip Erdogan ahead of elections set for mid-2023, with polls showing dwindling support for him and his ruling AK Party over the economic strains.

Natural gas prices were raised by 30% for households, by 16.3% for gas used in electricity production and by 10.2% for gas used in industry, state energy importer BOTAS said.

This follows a 35% hike in household gas prices in April.

"The public knows well that with the impact of the perfect storm in global and European energy markets consumers have been left exposed to exorbitant energy prices," BOTAS said.

It said global price rises had not been passed on at the same level to Turkish consumers and the latest hikes were designed to keep the impact on consumers at a minimum level.

Separately, the energy market regulatory authority (EPDK) raised electricity prices by between 15% and 25%, according to the Official Gazette.

Annual inflation hit 70% in April and May data is due on Friday. It is expected to have risen to 76.55% due to high energy and food prices and the weakening lira, with the end-year forecast at 63.5%, according to a Reuters poll.

The lira was flat at 16.4275 at 0757 GMT, having weakened 20% this year in addition to a 44% slide in 2021 following a series of unorthodox interest rate cuts sought by Erdogan.

Data on Wednesday showed Turkish manufacturing activity contracted for a third month running in May as both output and orders slowed amid muted demand and the ongoing price pressures. 

Gas price rises were initially seen pushing the consumer price index (CPI) up 50 basis points and the power price hike was seen contributing 35 basis points, according to calculations by three economists. Natural gas has a weight of 1.55% in the CPI, while electricity has a weight of 2.32%.

Reuters