The Role of Inflation Perceptions in Consumer Inflation Expectations: Evidence from the Euro Area

Matthieu Bussiere, Johanna Gilbert and Olesya Grishchenko

No 2026-038, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Using data on euro-area household inflation forecasts from the European Commission Consumer Survey, we show that households' perceptions of recent price changes play a key role in the formation of their inflation expectations. Such a relationship remains robust when we account for specific inflation components, household characteristics, and macroeconomic conditions, even though the perceptions-expectations relationship is heterogeneous across countries. These results highlight the importance of perceptions about inflation for the conduct of monetary policy.

Keywords: surveys; inflation expectations; monetary policy communication; central banks (search for similar items in EconPapers)
JEL-codes: E31 E58 E62 (search for similar items in EconPapers)
Pages: 56 p.
Date: 2026-06-03
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:103378

DOI: 10.17016/FEDS.2026.038

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