SELLING PRICE EXPECTATIONS AND CONSUMER PRICE INFLATION IN THE EURO AREA

C. Axioglou, F. Morice, R. Friz and P. Wozniak

Quarterly Report on the Euro Area (QREA), 2025, vol. 24, issue 4, 21-50

Abstract: Selling Price Expectations (SPE) in the Commission’s business surveys support the assessment of the nearterm inflation outlook in the EU and the euro area in European Economic Forecasts. The recent high inflation episode 2022-2023 has prompted renewed interest in the predictive power of SPE for near-term inflation pressures. This study develops a framework for assessing the predictive power of managers’ expectations of selling prices over different time horizons and identifying the sectors that influence most the future evolution of consumer prices. Inflation forecasts are produced from the information set deliberately restricted to SPE and past inflation to extract information on near-term consumer price pressures solely from the available survey data. Despite this limitation, the resulting forecasts are proven to significantly outperform benchmark autoregressive models and are broadly aligned with the inflation outlook in the 2025 Autumn Economic Forecast. Given the timeliness of the SPE dataset, the proposed forecasting framework has the potential to become a valuable element of the Commission’s inflation monitoring framework.

Keywords: Economic forecasting; Economic indicator; Euro; Inflation expectations (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:euf:qreuro:0244-02

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