Inflation Problem

Although many people on the street see inflation as a one-time price increase, inflation is defined as a continuous increase in the general level of prices in the economics literature. Although high inflation values reduce the purchasing power of people, an inflation value of 5% should occur in every economy. Because the inflation value is too low or negative will affect the economy of a country negatively in terms of production and growth.

States take steps and take precautions together with central banks against high or low inflation. At this point, one of the most used methods is the measure of public expenditures. Using this method, they try to keep inflation under control and support the economy to stay healthy. The way to manage the economy healthily is to implement economic policies that will relieve companies and households.

Since the economy is directly proportional to human preferences and psychology, being able to manage people's expectations is the main key to success in the economy. In other words, if people think that inflation will increase in the following months, they prefer to increase their expenditures and cause inflation to increase further. If they think that the prices will stay at the same level in the following months, they choose to postpone their expenditures.

Inflation is seen as a major problem in many developing countries. The inflation problem, which has been one of the problems that need to be solved for years in our country, is also one of the main problems of many Latin American countries such as Argentina, Mexico, and Chile. When the high unemployment problem is added to this problem, economic management becomes even more difficult.

Another factor affecting inflation is external factors that cause uncertainty such as the coronavirus pandemic and the Russia-Ukraine war. Such undesirable events greatly strain the economic situation of many countries. For example; The grain crisis in the Russia-Ukraine war seems to have affected Turkey and poor African countries the most.

In conclusion, we can say that inflation is a very important problem today and will continue to be an important problem in the future. While solving this problem, we should act by considering the theses proven by economics and take measures accordingly.