Turkey hikes minimum wage by 55% as inflation and living cost crisis bite

Turkey announced a hike of its minimum wage by 55% Thursday, amid a cost of living crisis that has plunged millions into financial hardship, hammered small businesses and rendered many unable to afford basic goods.

The move is aimed at easing the impact of surging living costs, but economists worry it will further increase inflation. The country's official rate of inflation is currently at a 24-year high of 84.4%.

Turkish President Recep Tayyip Erdogan, in a televised speech from Ankara Thursday, said that the monthly minimum salary would be brought to 8,500 lira ($455) starting in 2023. More than 30% of Turkey's workforce is on the minimum wage, according to Turkish officials.

There is also a political angle, country analysts say: Turkey's general election is due to be held in June 2023.

Timothy Ash, an emerging markets strategist at BlueBay Asset Management, told CNBC in an email: "Motive = win the election. Impact = higher inflation."

The country's rate of inflation slowed for the first time in more than 18 months in November, up 84.4% annually, a slight decrease from 85.5% the month prior.

"For now, the minimum wage is the highest in Turkey in the last 20 years," Ragip Soylu, Turkey bureau chief for Middle East Eye, wrote in a tweet. "It will go really well with Erdogan's core voters as it did in July. He will get some points. However it will be important to see whether the impact would continue until the presidential elections."