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Consumer inflation views in three countries

Author

Listed:
  • Maura Lynch
  • Bharat Trehan

Abstract

Financial markets and professional forecasters expect central banks to hit their inflation targets. But U.S., British, and Japanese consumers expect inflation to be higher. Data suggest that consumers in these countries don?t pay attention to central bank inflation targets and react sluggishly to persistent shifts in the inflation rate. However, the price of oil apparently influences inflation expectations strongly. It?s possible that consumers use highly volatile oil prices in a rule of thumb for updating their inflation expectations.

Suggested Citation

  • Maura Lynch & Bharat Trehan, 2013. "Consumer inflation views in three countries," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov25.
    • Handle: RePEc:fip:fedfel:y:2013:i:nov25:n:2013-35
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    References listed on IDEAS

    as
    1. Bharat Trehan, 2011. "Household inflation expectations and the price of oil: it's déjà vu all over again," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may23.
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    Cited by:

    1. Mazumder, Sandeep, 2021. "The reaction of inflation forecasts to news about the Fed," Economic Modelling, Elsevier, vol. 94(C), pages 256-264.
    2. Kelsey Berro & Gregory Colman & Dhaval Dave, 2015. "The Reality of the Real Rate," Business and Economic Research, Macrothink Institute, vol. 5(2), pages 270-287, December.

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