Inflation Turkish Lira

Inflation refers to the general increase in prices of goods and services in an economy over time. It results in a decrease in the purchasing power of a currency, meaning that each unit of currency buys fewer goods and services than it did before.

Inflation is typically measured as a percentage increase in the Consumer Price Index (CPI) or the Producer Price Index (PPI), which track the average change over time in the prices paid by consumers and producers, respectively. Central banks and governments closely monitor inflation as part of their economic policy, aiming to maintain price stability and sustainable economic growth.
There are various causes of inflation, and economists often categorize it into different types:

1. Demand-Pull Inflation: Occurs when the demand for goods and services exceeds their supply, leading to upward pressure on prices.
2. Cost-Push Inflation: Arises when the costs of production increase, and businesses pass these higher costs on to consumers in the form of higher prices.
3. Built-In Inflation (also known as Wage-Price Inflation): Occurs when workers demand higher wages, and businesses pass on these increased labor costs to consumers through higher prices.
4. Monetary Inflation: Results from an increase in the money supply in the economy. Central banks play a crucial role in controlling monetary inflation through monetary policy.
5. Hyperinflation: A very high and typically accelerating inflation, often associated with a collapse of confidence in the currency.

While moderate inflation is considered a normal part of a growing economy, high or hyperinflation can have detrimental effects, such as eroding the value of savings, distorting economic decision-making, and creating uncertainty in financial markets. Central banks often set inflation targets and use monetary policy tools, such as interest rates, to achieve and maintain price stability.Thanks your reading.