The Role of Inflation Perceptions in Consumer Inflation Expectations: Evidence from the Euro Area

June 2026

The Role of Inflation Perceptions in Consumer Inflation Expectations: Evidence from the Euro Area

Matthieu Bussière, Johanna Gilbert, and Olesya Grishchenko

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.

Keywords: inflation expectations, inflation perceptions, surveys, consumers, central banks, monetary policy communication, euro area

DOI: https://doi.org/10.17016/FEDS.2026.038

PDF: Full Paper