Inflation gap between rich and poor in Turkey hits record high

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The pressure resulting from rising consumer prices has increased significantly on Turkey’s lowest income group over the last six years, causing the gap between the country’s rich and poor to reach record highs, according to an economy note issued by Bahçeşehir University’s Center for Economic and Social Research (BETAM) on March 2.

While the inflation effect gap between rich and poor people was around 13 percent in 2013 at the expense of the poor, the rate increased to 18 percent in 2014, according to the results of Household Budget Surveys (HBS) by the Turkish Statistics Institute (TÜİK), which were assessed by BETAM.

The gap in the pressure of rising inflation rates between rich and poor was mainly caused by the above average rise in housing and food prices, BETAM stated.

“Inflation calculated by TÜİK captures inflation faced by a representative household as it covers all income and expenditure groups in Turkey. However, inflation faced by households of different income and expenditure groups may differ, since different groups consume different baskets of goods and services,” it added.

The report calculated different price indices for each income quintile in Turkey by using consumption data from the Household Budget Surveys released by TÜİK for the period 2003-2014.

“The results indicate poorer households have faced considerably higher inflation rates than richer ones in recent years. The poorest households in the lowest income quintile face higher inflation levels since price increases in food and housing are above average increase in prices during this period,” BETAM stated.

While the inflation difference between the top income quintile and the lowest evolved in favor of poor households from 2003 to 2006, the inflation difference between the poor and the rich has reached 18 percent points against the poor households by the end of 2014 due to increases in food and housing prices.