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Inflation and consumption inequality

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  • Esat Daşdemir

    (Istanbul Gelisim University, Banking and Insurance)

Abstract

This study investigates the relationship between inflation and consumption inequality in the Turkish economy. It utilizes data from household budget and consumption surveys conducted between 2002 and 2023. Lorenz curves and Gini coefficients were calculated to measure consumption inequality across various income and consumption groups, and these metrics are introduced to the literature. The findings indicate that increases in the consumption share of upper-income groups tend to coincide with periods of heightened inflation. The results further suggest that price increases in specific categories of goods and services can intensify consumption inequality within those categories. Based on the analysis of 12 goods and services groups in the Turkish economy, the presence of both absolute and relative inflation in a category is found to increase consumption inequality. In particular, relative price increases are associated with a more pronounced rise in inequality. While a one-unit increase in the inflation rate of a category raises consumption inequality by 0.12%, a relative increase in that category’s price raises it by 4.48%.

Suggested Citation

  • Esat Daşdemir, 2025. "Inflation and consumption inequality," SN Business & Economics, Springer, vol. 5(7), pages 1-29, July.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:7:d:10.1007_s43546-025-00850-7
    DOI: 10.1007/s43546-025-00850-7
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    Keywords

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    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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