Turkey considers boosting minimum wage again amid heightened inflation: Bloomberg

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Turkey is exploring another boost to the national minimum wage, as consumer price inflation surges at its fastest pace in nearly 25 years, far outpacing wages, Bloomberg reported Friday, citing officials with knowledge on the matter.

President Recep Tayyip Erdogan is set to receive proposals from the country's Labor Ministry regarding a range of possible wage hikes, the people told Bloomberg, adding that Erdogan will likely consider the options after he returns from a NATO summit on June 30.

Note Turkey had lifted its minimum wage by a record 50.5% to 4,253 liras ($246) in January, however, CPI is jumping 74% on a Y/Y basis, according to Bloomberg. That means consumers' real (inflation-adjusted) wages are negative as their purchasing power gets reduced.

Some members of the ruling party argue that another wage hike "will cripple employers and lead to job losses," though the "majority believe it’s inevitable given the pain being felt in AK Party strongholds," the people said, as reported by Bloomberg.

The potential move would go against the theoretical concept of a wage/price spiral, which represents a feedback loop of wage increases causing price gains. In other words, rising wages increase income allowing consumers' to spend buy more goods causing prices to drift higher.

Despite soaring inflation, Turkey's central bank continues to conduct unorthodox monetary policy aligned with Erdogan's growth strategy of keeping interest rates low. Most central banks, though, are embarking on hawkish policy to bring down inflationary pressure.

Related ETFs: iShares MSCI Turkey (NASDAQ:TUR) and Emerging Global Shares Turkey Small Cap (TUSC).

Earlier this month, (June 8) turkish lira plunges again as President Erdogan keeps rejecting higher rates.