Global | Measuring consumers inflation expectations using data from the media

Media is a relevant source of information for households to form their inflation expectations. We identified salient products from CPI basket and built a high frequency news based indicator (GDELT) to monitor the volume of news about “salient” goods prices by geography.

Key points

• Key points:
• Our news based indicator has a high correlation with other inflation expectations surveys.
• We also extend the analysis to capture firms’ inflation expectations monitoring second round effects in the media, disentangling between wage or salary costs, oil or fuel costs, energy and electricity costs and financial costs.
• Inflation expectations shape consumers’ decisions such as type of consumption, savings, investment, and wage bargaining.
• How expectations of future inflation are formed by households is a key issue and can diverge from market and analysts.
• We analyze how the volume of inflation-related news mimic consumer’s inflation expectations.

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