Getting Real? The Uneven Burden of Inflation across Households in Turkey
Inflation is typically measured using aggregate price indices that are based on bundles of goods and services sold or consumed by the “median” agent. In the case of households, in particular, budget shares vary substantially across income and demog...
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/700111638283851455/Getting-Real-The-Uneven-Burden-of-Inflation-across-Households-in-Turkey http://hdl.handle.net/10986/36645 |
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okr-10986-366452021-12-04T05:10:43Z Getting Real? The Uneven Burden of Inflation across Households in Turkey Baez, Javier E. Inan, Osman Kaan Nebiler, Metin INFLATION POVERTY INEQUALITY INCOME DISTRIBUTION LABOR INCOME Inflation is typically measured using aggregate price indices that are based on bundles of goods and services sold or consumed by the “median” agent. In the case of households, in particular, budget shares vary substantially across income and demographic groups. Assessing how inflation behaves at the household level requires understanding how heterogenous changes in consumer prices affect household choices and well-being differently. In recent years, price increases have been particularly high in Turkey, with double-digit inflation starting in 2017 and intensifying in 2018 and 2020 due to exchange rate volatility, macroeconomic instability, and the economic disruption brought about by Covid-19. This paper calculates income-decile price indices to examine the inflation experience across income groups and discusses their implications for household welfare. Households in the first decile allocate nearly 70 percent of their budget to food and housing, twice as much as the corresponding share for the typical household in the upper decile. Inflation measures that consider these heterogeneities in expenditures show a higher burden for the poor in recent inflation episodes driven by rapid increases in food prices (2013, 2015 and 2019). In 2015, for instance, 342,000 additional people would have been deemed poor (an increase of 4.2 percent) had the poverty calculations taken into account the actual inflation experience of poor and vulnerable households. A methodological extension of the World Bank’s upper-middle-income poverty line ($5.50 2011 purchasing power parity) that takes into consideration the inflation experience of the bottom deciles yields higher poverty rates for Turkey every year between 2011 and 2020. 2021-12-03T14:56:45Z 2021-12-03T14:56:45Z 2021-11 Working Paper http://documents.worldbank.org/curated/undefined/700111638283851455/Getting-Real-The-Uneven-Burden-of-Inflation-across-Households-in-Turkey http://hdl.handle.net/10986/36645 English Policy Research Working Paper;No. 9869 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Turkey |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
INFLATION POVERTY INEQUALITY INCOME DISTRIBUTION LABOR INCOME |
| spellingShingle |
INFLATION POVERTY INEQUALITY INCOME DISTRIBUTION LABOR INCOME Baez, Javier E. Inan, Osman Kaan Nebiler, Metin Getting Real? The Uneven Burden of Inflation across Households in Turkey |
| geographic_facet |
Europe and Central Asia Turkey |
| relation |
Policy Research Working Paper;No. 9869 |
| description |
Inflation is typically measured using
aggregate price indices that are based on bundles of goods
and services sold or consumed by the “median” agent. In the
case of households, in particular, budget shares vary
substantially across income and demographic groups.
Assessing how inflation behaves at the household level
requires understanding how heterogenous changes in consumer
prices affect household choices and well-being differently.
In recent years, price increases have been particularly high
in Turkey, with double-digit inflation starting in 2017 and
intensifying in 2018 and 2020 due to exchange rate
volatility, macroeconomic instability, and the economic
disruption brought about by Covid-19. This paper calculates
income-decile price indices to examine the inflation
experience across income groups and discusses their
implications for household welfare. Households in the first
decile allocate nearly 70 percent of their budget to food
and housing, twice as much as the corresponding share for
the typical household in the upper decile. Inflation
measures that consider these heterogeneities in expenditures
show a higher burden for the poor in recent inflation
episodes driven by rapid increases in food prices (2013,
2015 and 2019). In 2015, for instance, 342,000 additional
people would have been deemed poor (an increase of 4.2
percent) had the poverty calculations taken into account the
actual inflation experience of poor and vulnerable
households. A methodological extension of the World Bank’s
upper-middle-income poverty line ($5.50 2011 purchasing
power parity) that takes into consideration the inflation
experience of the bottom deciles yields higher poverty rates
for Turkey every year between 2011 and 2020. |
| format |
Working Paper |
| author |
Baez, Javier E. Inan, Osman Kaan Nebiler, Metin |
| author_facet |
Baez, Javier E. Inan, Osman Kaan Nebiler, Metin |
| author_sort |
Baez, Javier E. |
| title |
Getting Real? The Uneven Burden of Inflation across Households in Turkey |
| title_short |
Getting Real? The Uneven Burden of Inflation across Households in Turkey |
| title_full |
Getting Real? The Uneven Burden of Inflation across Households in Turkey |
| title_fullStr |
Getting Real? The Uneven Burden of Inflation across Households in Turkey |
| title_full_unstemmed |
Getting Real? The Uneven Burden of Inflation across Households in Turkey |
| title_sort |
getting real? the uneven burden of inflation across households in turkey |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/undefined/700111638283851455/Getting-Real-The-Uneven-Burden-of-Inflation-across-Households-in-Turkey http://hdl.handle.net/10986/36645 |
| _version_ |
1764485675644616704 |