SURPRISING INFLATION RATE IN IZMIR
Inflation rates for Izmir skyrocketed. Turkish Statistical Institute (TSI) announced the annual inflation rates for both December and 2015, and Izmir and Aegean Region cities came up with the highest inflation rates. The experts stated that Izmir, a city in close proximity to agricultural centers and has a cost advantage compared to Istanbul, having high inflation rate was very startling.
Prof. Dr. Hakan Yetkiner, Lecturer at Department of Economics, Izmir University of Economics, stated that two general elections were held in Turkey in 2015 and actual devaluation was at least 25%, therefore low inflation rates were not to be expected. He said that Izmir and Aegean Region cities’ having high inflation rates was very remarkable. “CPI increased by 0.41% in Izmir in December 2015 compared to the previous month of the same year. The highest increases in CPI were recorded in Izmir region (9.83%) compared with the same month of the previous year and in Izmir region (8.31%) on the twelve months moving averages basis. When we look at the inflation rates for the month of December, we can see that the first eight regions are the cities located in the east of Ankara. Interestingly enough, Izmir ranks in the ninth place. Moreover, all of the cities, that are not located in the east of Ankara and are above the national average, are from the Aegean Region. We can explain the inflation rates in the east of Turkey as it was caused by winter conditions and disarray in some of the cities. However, we cannot explain the reason behind Aegean Region having the highest inflation rate in December 2015, as Istanbul and Ankara rank below the national average, scoring almost zero”, said Prof. Dr. Yetkiner.
'Competition is the Answer'
Prof. Dr. Yetkiner reported that the Aegean Region cities experienced the highest inflation rates in the past year, and Izmir ranked in the first place, Aydın, Denizli, and Muğla ranked in second place, and Manisa, Afyon, Kütahya, and Uşak ranked in the sixth place. He said that analysis study for the price changes in goods and services needed to be conducted to explain the high inflation rates. Prof. Dr. Yetkiner stated the following:
“Price dynamics of some of the goods and service groups show a significant difference among regions. The highest monthly increase was 1.24% in food and non-alcoholic beverages compared to the previous month. Hotels, cafes and restaurants, and recreation and culture were the other main groups where high annual increases were realized. So, we should not be surprised by this fact. When consumers’ income increases, service sector expenses increase as well. If Izmir and Aegean Region has inflation rates higher than the national average, and if this is based on the expenses in ‘Hotels, cafes and restaurants’, ‘Recreation and culture’, and ‘Food and non-alcoholic beverages’ groups, then the solution lies within competition.”
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