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Turks found little to laugh about on April 1 as the government launched huge rises in energy tariffs, laying the blame on the weak lira and spiking oil prices. The increases - which accelerated past expectations - add to the difficulties the country faces in hitting inflation targets, and threaten exporters.

Energy Minister Taner Yildiz announced a staggering rise of 18.7% in the gas tariff and a hike in electricity prices by 9.3% for domestic users and 8.7% for industrial customers on March 31, saying that the weakened lira has combined with rises in global energy market pricing to produce the huge increases. The new tariffs took effect on April 1.

'There is a cost increase of about 17% in natural gas due only to changes in the exchange rate," he said, according to Dogan. "In the last 19 months, oil and natural gas prices have risen 29%, excluding the exchange rate. The reason for the latest price increase is the difference in the exchange rate and rising oil prices."

Yıldız added that ongoing political instability in the region isn't helping either. "In addition to surging crude prices, political tension in North Africa, Syria and between Iran and Israel make energy prices jump even higher. These are the major reasons behind price hikes in Turkey -- not a failure in supply or a decline in demand," he claimed.

The lira has lost 15% against the dollar since the end of 2010, reports Reuters. Inflation, which was running at 10.4% in February, is almost double the government's target for the year. TEB bank estimates that the direct impact of the energy price increases on the indicator will be around 0.55%, and notes the challenge it presents.

"Formerly, we were assuming a 10% gas price increase in October. We do not exclude the possibility of further gas price hikes in 2012. The CBRT's revised inflation forecast of 6.5% will be very difficult to achieve following the utility price hikes," TEB economist Selim Cakir wrote in a note.

Erste meanwhile sees the price hike affecting export sectors, which is bad news for Turkey's already huge trade deficit. "We see the latest price hike as negative for the sectors that are more sensitive to energy prices, such as cement, glass and steel," the bank's analysts wrote.

The massive price spike is unlikely to help perk up slowing growth either. Whilst Turkey may have recorded the world's second highest growth in 2011 at 8.5% for the year, it saw economic expansion slow dramatically in the fourth quarter to 5.2%.

However, analysts suggest that may not be a bad thing, positing that it could help rebalance the current account deficit and cool an economy that is threatening to overheat. At the same time, the country needs to address several structural reforms, which are unlikely to happen whilst growth is spiking.

"[Slowing growth shows] that central bank policies are working, albeit with a delay," Nilufer Sezgin, chief economist at Istanbul-based brokerage Ekspres Invest, told Bloomberg. "We were seeing domestically driven growth led by private-sector consumption and investments. A slowdown in these channels will bring down growth."