Macroeconomics on Turkish Inflation

Running head: MACROECONOMICS ON TURKISH INFLATION 1
Macroeconomics on Turkish inflation
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MACROECONOMICS ON TURKISH INFLATION 2
Introduction
Inflation is the persistent increase in the prices of goods and service in the economy over
a specific period of time. Considering the time element, this inflation is compared against time
and it becomes a rate at which the prices go up continuously, thereby affecting the consumer
purchasing power. There are a number of factors that facilitate this increment, some of which are
discussed in this study. However, this study focuses on the Turkish economic perspective in
terms of inflation fluctuation rate that have its on ramifications to the entire economy.
Consumer Confidence
The rate of inflation in an economy has a lasting impression on the confidence of the
consumers that are normally determined by the expectations. The information given concerning
the Turkish inflation mainly concerns the years 2017 and backwards which have been manifested
by prevalent inflation rates. However, the periods after 2017, i.e. in 2018, it is recorded that the
rate of consumer inflation in Turkey rose to a high of 17.90%, especially in the month of August.
Thus, the surges of inflation in the period surrounding August signaled imminent changes to the
stance of the Central Bank monetary stances in Turkey. The consumer confidence went low and
made the country to sink into deeper inflation rates.
Before going deeper with the inflation surges in the country, it is prudent to understand
that the nature if inflation in Turkey is basically driven by increasing prices in specific sectors of
the economy that are known to be the chief culprits in instigating inflation. Among these sectors
are the price increases in the transportation sector, the price increase in the housing, water, and
electricity sectors. Lasts but not least are the fuel sub sectors that have an extensive marginal
effect to most of the other sectors.