Reversing Effects Between Inflation Expectations and Consumer Intentions. Two decades of survey evidence from Germany

This study examines possible predictors and consequences of expected inflation, a central determinant of individuals’ decision making. We utilize unique microdata from the German consumption climate survey covering monthly data from more than 220,000 individuals between 2003 and 2025. Our findings confirm that consumer perception of past inflation plays a decisive role for inflation expectations leading to sticky inflation expectations that need some time to adjust to official inflation statistics. In addition, results indicate that across the sample period, inflation expectations are correlated with reduced individual income expectations. In contrast and as a novelty, the present data shows that the relationship with buying and saving intentions is not stable. During moderate inflation phases inflation expectations are related to lower buying and lower saving intentions, during inflation peaks this relationship reverses to the opposite and during transition phases from moderate to high inflation or vice versa, no significant relationships can be found. Theoretically, the present research indicates that high frequency data is needed to estimate how inflation expectations and consumer intentions are related. Practically, the present research can be used to better time and frame inflation communication and mitigation policies.