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Consumer Price Perceptions and Expectations

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  • Simmons, Peter
  • Weiserbs, Daniel

Abstract

This paper examines qualitative quarterly survey data on U.K. consumers price anticipations in the context of a framework designed to allow the authors to test the predictive ability of consumers and the information content of this survey data. The results indicate that the survey data contains useful information but that it is biased in particular ways. Consumers appear to have short memories of past inflation but given this, they appear to use additional information to that contained in recent past price changes in order to forecast future inflation. In particular they may take current short term interest rates into account. Only those households expecting high inflation rates are important in predicting inflation. Copyright 1992 by Royal Economic Society.

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  • Simmons, Peter & Weiserbs, Daniel, 1992. "Consumer Price Perceptions and Expectations," Oxford Economic Papers, Oxford University Press, vol. 44(1), pages 35-50, January.
    • Handle: RePEc:oup:oxecpp:v:44:y:1992:i:1:p:35-50
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    Cited by:

    1. Tomasz Lyziak, 2010. "Measurement of perceived and expected inflation on the basis of consumer survey data," IFC Working Papers 5, Bank for International Settlements.
    2. Peter, Eckley, 2015. "(Non)rationality of consumer inflation perceptions," MPRA Paper 77082, University Library of Munich, Germany.
    3. Ranyard, Rob & Missier, Fabio Del & Bonini, Nicolao & Duxbury, Darren & Summers, Barbara, 2008. "Perceptions and expectations of price changes and inflation: A review and conceptual framework," Journal of Economic Psychology, Elsevier, vol. 29(4), pages 378-400, August.
    4. Jan Marc Berk & Gerbert Hebbink, 2006. "The anchoring of European inflation expectations," DNB Working Papers 116, Netherlands Central Bank, Research Department.
    5. Yuxiang, Karl & Chen, Zhongchang, 2010. "Monetary policy credibility and inflationary expectation," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 487-497, August.
    6. Gerberding, Christina, 2001. "The information content of survey data on expected price developments for monetary policy," Discussion Paper Series 1: Economic Studies 2001,09, Deutsche Bundesbank.
    7. Michela Nardo, 2003. "The Quantification of Qualitative Survey Data: A Critical Assessment," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 645-668, December.
    8. Jan Marc Berk, 2002. "Consumers' Inflation Expectations And Monetary Policy In Europe," Contemporary Economic Policy, Western Economic Association International, vol. 20(2), pages 122-132, April.
    9. Gärling, Tommy & Gamble, Amelie & Christandl, Fabian, 2013. "Income increases do not compensate for perceived inflation—A price-consumption anomaly," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 11-15.

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