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The Turkish Statistical Institute (TurkStat) has announced the annual consumer inflation rate in October 2018 as 25.24 percent. In addition to the significant depreciation of the Turkish Lira vis-a-vis other currencies, Turkey has also had the highest inflation rate of the last 15 years.
Turkey is one of the 10 countries of the world with the highest inflation rate. As for its ranking among the countries in Europe, Turkey ranks the first in terms of inflation rates with 25.24 percent.
Turkey has been followed by Ukraine with 8.90 percent and Romania with 5 percent. Romania is also the country with the highest inflation rate among the European Union (EU) countries.
The inflation rate in Estonia has been measured as 4.40 percent and in Hungary as 3.80 percent, which render them the countries with the second and third highest inflation rates in the EU.
As for the United Kingdom, which is classified as a developed country and one of the biggest economies of the world, but whose economy as well as consumer prices have been negatively affected by the Brexit, it is the country with the seventeenth highest inflation rate in Europe.
The European countries with the lowest rates of inflation are Denmark and Ireland. In both countries, inflation rates are under the level of zero. While this figure is 0.60 percent in Denmark, it is 0.90 percent in Ireland. The inflation rates in Liechtenstein and Portugal are also both 1 percent.
What is inflation, why does it increase?
Inflation can be defined as a sustained or continuous increase in the price levels of goods and services in the economy of a country over a period of time. An increasing rate of inflation implies that the purchasing power of money has also been on the decrease.
The most common reason of an increasing inflation is a disturbed equilibrium of supply and demand. In Turkey, the reason of the increasing inflation is being stated as bad economic policies and resulting absence of domestic production and extreme fluctuation in the foreign exchange rates.
The level of inflation is determined based on the result of the consumer and producer prices indexes. (HA/SD)
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