Upward bias in inflation perceptions: Persistence, drivers, implications

Peter Andre, Claudia Schaffranka and Michael Weber

No 117, SAFE White Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: This paper examines the persistent upward bias in euro area households' inflation perceptions and expectations, even when realized inflation is near the ECB's target. It discusses behavioural and informational drivers of this bias, its implications for consumption, wage setting, and monetary policy transmission, and the challenges it poses for ECB communication and credibility. The study concludes that improved monitoring and household-oriented communication are essential. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 26 February 2026.

Keywords: Inflation Expectations; Monetary Policy; ECB (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewh:337489

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