Indirect Consumer Inflation Expectations

Surveys often measure consumers’ inflation expectations by asking directly about prices in general or overall inflation, concepts that may not be well-defined for some individuals. In this Commentary, we propose a new, indirect way of measuring consumer expectations: Given developments goods and services during the next 12 months, ask them how their incomes would have to change make equally well-off relative current situation such they could buy same amount as can today. Using massive number survey responses at high frequency, show has risen sharply since early 2021. Higher experiences correlate with higher across US cities around world.