February 2017 issue contents
Consumers' Attitudes and Their Inflation Expectations

by Michael Ehrmanna, Damjan Pfajfarb and Emiliano Santoroc


This paper studies consumers' inflation expectations using micro-level data from the University of Michigan's Surveys of Consumers. It shows that beyond the well-established socioeconomic factors such as income, age, or gender, inflation expectations are also related to respondents' financial situation, their purchasing attitudes, and their expectations about the macroeconomy. Respondents with current or expected financial difficulties and those with pessimistic attitudes about major purchases, income developments, or unemployment have a stronger upward bias than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about inflation.

JEL Codes: C53, D84, E31.

Full article (PDF, 35 pages, 537 kb)

a European Central Bank 
b Federal Reserve Board 
c University of Copenhagen