Influence of Inflation on Cost of Living among the Urban Residents in Turkey

Abstract

Inflation is the increase in the price of products and services over some time. In some instances, inflation affects all aspects of the economy, from consumer spending, business investment and employment rates to government programs, tax policies and interest rates. The Turkish economy has experienced a reasonably high rising cost of living and unsuccessful disinflation programs within the past three decades. Thus, the study sought to examine the influence of inflation on the cost of living among urban residents in Turkey. The study used a descriptive research design. The target population included residents from Istanbul, Ankara and İzmir. A simple random sampling technique was used to get the sample size. The simple random sampling enabled any of the residents to have an equal chance to be included in the study. The sample size used was 479 people. The analysis of the data was done using descriptive and inferential statistics. The study findings indicated that inflation positively and significantly affects the cost of living. The increase in inflation increases the cost of living. The regression results showed a positive and significant relationship between inflation and the cost of living. The increase in the inflation rate increases the costs of factors of production and the burden is passed to consumers. It was noted that inflation affects the urban residents more than those in the rural areas. The high cost of living makes people more susceptible. The study concluded that inflation had increased the cost of living. The study recommended that measures be implemented to ensure that inflation remains as low as possible. The government needs to develop policies to ensure inflation does not rise consistently. The government needs to create effective macro-economic plans to cushion the poor during high inflation.