Seyfettin Gürsel and Furkan Kavuncu

TurkStat’s inflation consumption index (CPI) reflects in fact the changes in the value of the representative household’s consumption basket based on market prices. However, inflation faced by households which belong to different income and expenditure groups may differ since the composition of their consumption basket differs widely comparing to the basket of the representative household. In this research brief, different price indices are calculated for each income quintile from the poorest to richest by using consumption data from the Household Budget Surveys (HBS) released by TurkStat for the period December 2003 – May 2017. In our previous brief we had claimed that poorer households faced higher inflation rates than richer ones between 2008 and 2016. When we look at the period of May 2017, we observed a slight increase in the inflation difference between rich and poor; however, with a slower pace compared to our previous research brief. The difference, which was 21.4 percentage points in April 2016, showed a fluctuating trend during the year and finally increased by 0.1 percentage points to 21.5 percent in May 2017. Even though we expected a strong increase in inflation difference to the detriment of the poor due to the strong increase in housing and food prices as of January 2017, the widening of the inflation gap has been limited to 0.1 percentage points because of the increase in transportation prices which has much larger share in the consumption basket of rich.

doc. ResearchBrief213

pdf. ResearchBrief213