Abstract:

As a general definition inflation refers to the increase in general level of prices. Increase of inflation is an unwanted situation, because inflation is the most important macroeconomic indicators of a country. Because of this, fight against inflation policies are followed according to the economic conjuncture. In order to be able to fight with inflation in an economy, initially determining the causes of the inflation has great importance. Turkey was in the situation that has to fight inflation for years. Only after the years 2000’s, inflation decreased in single-digit numbers in Turkey. This is a great success for our country. Without a doubt, in the emerging of this success, stable political and economic administrations’ part is big. But Turkey is a country that dependent on foreign countries in terms of economy. It imports the most of the energy sources that it needs like especially oil, natural gas, electricity and coal. Therefore, the price increase in this energy sources are effecting domestic prices on one hand and on the other hand it causes foreign trade deficit. Thus exchange rate increases in value and imported products’ price increase once again. This causes inflation due to cost increases. In this context, inflation’s causes in Turkey, that it causes arguments from time time, wanted to be investigated. In the study, between the years 2006-2017, price per barrel of crude oil and exchange rate variables’ effect on inflation is studied. In the study that uses VAR model, there are findings found that exchange rate and crude oil prices have effect on inflation.

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