Working Paper
The Role of Inflation Perceptions in Consumer Inflation Expectations: Evidence from the Euro Area
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.
JEL Classification: E31; E58; E62;
https://doi.org/10.17016/FEDS.2026.038
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Bibliographic Information
Provider: Board of Governors of the Federal Reserve System (U.S.)
Part of Series: Finance and Economics Discussion Series
Publication Date: 2026-06-03
Number: 2026-038