Perceived inflation and expected future prices in different currencies

Price perception and confirmation bias in the context of a VAT increase

“…Finally, processing of price information is a task of high complexity, given the existence of a large number of diverse products that have many different prices. In the context of perception of price changes, it needs to be considered, that even in case of constant overall price levels for certain product categories, there are usually many different and unsystematic price changes within these product categories, for instance due to type of store, season, or discount offers (e.g., Gärling & Gamble, 2008;Gärling, Gamble, & Juliusson, 2007). More technically, there should be a huge variance behind constant overall price levels for a particular product category.…”

Perceptions and expectations of price changes and inflation: A review and conceptual framework

“…Turning to research on the determinants of expectations, a number of studies have shown that past and recent inflation (Carlson & Parkin, 1975;Defris & Williams, 1979;Gärling & Gamble, 2008) and perceived inflation (Jonung, 1981;Wärneryd & Wahlund, 1985) are reliable predictors of expected inflation, hence the bi-directional linkage between perceptions and expectations depicted in the conceptual framework of Fig. 1.…”

How is perceived inflation related to actual price changes in the European Union?

“…Although diminishing sensitivity implies consumers to evaluate price changes in terms of relative percentage differences rather than absolute price differences, Gärling and Gamble (2008) found that consumers used both types of evaluation in forecasting future inflation. By way of comparison, we conducted regression (8) with the rate of change substituted by price differences.…”