The aim of our study is to analyse selected features of consumers' inflation expectations in European countries. After assessing reliability of survey measures of inflation expectations available we use the measures fulfilling our requirements to examine three features of inflation expectations, i.e. their forecasting accuracy, causality between inflation expectations and actual future inflation and the long-run convergence of expectations to the actual future inflation. The forecasting accuracy of quantified measures of inflation expectations is rather poor and similar to naive forecasts. Even if they provide biased predictors of future inflation, there exists causality between actual future inflation and current expectations. Our analysis may be useful in selecting adequate measures of consumer inflation expectations embodying information important in monetary policy making.

Keywords: inflation expectations, survey, rationality
JEL: D12, D84, E58

  Tomasz Łyziak, Ewa Stanisławska - Consumer Inflation Expectations in Europe: Some Cross-country Comparisons - plik pdf; (240 KB)