Consumer inflation expectations in August 2015
NBP data: Consumers surveyed by the Central Statistical Office (GUS) in the first half of August expect prices to rise only slightly over the next 12 months.
Narodowy Bank Polski released monthly data on consumer inflation expectations on 31 August 2015. The expectations index, that is the difference between the percentage of consumers who expect prices to rise faster than at present, and the sum total of the percentage of consumers who expect prices to rise at a slower rate than at present, remain unchanged or fall, was -42 percentage points in August. In July, the index reached -40 percentage points.
Quantification of the data obtained in the GUS survey conducted in the first half of August shows that the average inflation index as expected by consumers over the next 12 months is still close to zero. This means that inflation expectations have remained low – i.e. below the tolerance band for deviations from the NBP inflation target – for two years now.
The expectations qualification procedure, which translates respondents’ subjective perceptions into the language of official inflation statistics, assumes that the price change in the preceding 12 months as perceived by consumers equals the CPI available at the time of the survey. In August 2015, the figure was negative at -0.8%. Such a result makes it difficult to interpret the survey results because, in line with the design of the survey question, the respondents who expect prices to grow are to specify whether growth will be faster, similar or weaker than presently observed. Therefore, the August quantification procedure used the last registered positive rate of current inflation (i.e. the August 2014 figure of 0.3%) to represent the perceived current inflation instead of the negative rate of inflation available at the time of the survey. The technical nature of this operation renders the objectivized assessment of inflation expectations more tentative, and the quantification results should be treated as an approximation.
Narodowy Bank Polski examines, on a regular basis, inflation expectations of not only consumers, but also the business community, financial analysts and professional forecasters. These provide one of the inputs to the monetary policy decision-making process.
See also: Consumer inflation expectations in August 2015