Inflation in Turkey has reached its highest level in 20 years at 61.14% in March 2022 due to soaring energy and food prices exacerbated by the war in Ukraine. Monthly inflation increased over 5% and prices rose significantly for utilities, taxes, electricity, natural gas, sugar, internet, and wheat. The COVID-19 pandemic also presented economic challenges for Turkey, resulting in 2.6 million job losses and increasing poverty levels. Research found Turks have below average financial knowledge, behavior, and literacy compared to other countries surveyed.

1. INFLATION AND
TURKEY

2. What is inflation ?
■ Inflation is the decline of purchasing power of a given
currency over time. A quantitative estimate of the rate at
which the decline in purchasing power occurs can be
reflected in the increase of an average price level of a basket
of selected goods and services in an economy over some
period of time. The rise in the general level of prices, often
expressed as a percentage, means that a unit of currency
effectively buys less than it did in prior periods

4. Understanding the
inflation
■ While it is easy to measure
the price changes of
individual products over time,
human needs extend beyond
one or two such products.
Individuals need a big and
diversified set of products as
well as a host of services for
living a comfortable life. They
include commodities like food
grains, metal, fuel, utilities
like electricity and
transportation, and services
like healthcare,
entertainment, and labor.

5. Causes of inflation
■ An increase in the supply of money is the root of inflation,
though this can play out through different mechanisms in the
economy. Money supply can be increased by the monetary
authorities either by printing and giving away more money to
the individuals, by legally devaluing (reducing the value of) the
legal tender currency, more (most commonly) by loaning new
money into existence as reserve account credits through the
banking system by purchasing government bonds from banks on
the secondary market.

6. Inflation rate of Turkey
■ Turkey’s official inflation rate hit its highest level in 20 years as soaring
energy and food prices compound the economic challenges confronting the
Turkish Government.
■ Turkey’s Statistical Institute, TUIK, on Monday said that Turkey’s annual
inflation rate reached 61.14 percent in March, which is the highest inflation
rate in the last two decades.
■ As the prices of utility bills and taxes rose significantly due to an ongoing
economic crisis and increasing energy prices, due to the War in Ukraine,
monthly inflation was 5.45 percent in March, an increase of 22.81 percent
compared to December 2021.
■ During the past month, the electricity price increased by 50 percent, natural
gas prices by 35 percent, sugar by up to 85 percent, internet prices by 67
percent and wheat by 22 percent.

8. Economical effects of COVID19
in Turkey
■ After the 2018 currency crisis impeded Turkey’s
downward trend in poverty, the COVID-19 pandemic
has presented another major setback for the country’s
poverty reduction goals. When Turkey suffered its first
wave of the pandemic, the country lost 2.6 million jobs,
which made up 9.2% of total employment. Populations
living above the poverty line, but with high vulnerabilities
to economic insecurity, have endured the brunt of these
job losses, accounting for six out of 10 of the job losses.
The impact of COVID-19 on poverty in Turkey has been
severe as COVID-19 disproportionately impacts the
impoverished.

9. FINANCIAL
LITERACY

10. Financial literacy in Turkey
■ In one of a research which is conducted with 14 countries
indicates that , financial knowledge and financial behavior
levels are lower than the average of the 14 countries,
whereas financial attitude level is around the average. The
overall financial literacy score, which is a combination of
the three aforementioned aspects, is also lower than the
average of the 14 countries