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Inflation

Inflation is the sustained rise in the general price level of goods and services and the decline in the purchasing power of money. Inflation expresses the average rate of price increases in the economy and is measured monthly by TurkStat through consumer (CPI) and producer (PPI) price indices.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Interpretation
  4. 4.Pitfalls
  5. 5.Frequently asked questions

Key points

  • It is the main determinant of central bank policy rate decisions and affects the real value of every investment return.
  • High inflation makes nominal returns misleading: a 30% return under 40% inflation is a real loss.
  • personal inflation can differ from the official rate because basket weights vary by household.

Formula / calculation

Monthly inflation = (This month’s index / Last month’s index − 1) × 100; Annual inflation = (This month’s index / Index 12 months ago − 1) × 100. The annual rate is the compounded product of monthly rates, not their sum. The Yatırımcı.AI inflation page shows monthly CPI and the 12-month cumulative rate.

Interpretation

High inflation makes nominal returns misleading: a 30% return under 40% inflation is a real loss. Rate hikes are expected when inflation expectations rise and cuts when they fall; stocks, gold and FX are treated as inflation hedges.

Pitfalls

personal inflation can differ from the official rate because basket weights vary by household. Base effects can move the annual rate independently of the monthly trend. Inflation accounting can make company profits hard to compare.

Pages where this term appears

Related terms

Frequently asked questions

Inflation is the sustained rise in the general price level of goods and services and the decline in the purchasing power of money.

Monthly inflation = (This month’s index / Last month’s index − 1) × 100; Annual inflation = (This month’s index / Index 12 months ago − 1) × 100. The annual rate is the compounded product of monthly rates, not their sum. The Yatırımcı.AI inflation page shows monthly CPI and the 12-month cumulative rate.

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