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Why Have Inflation Expectations Surged Recently? A Historical Perspective

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  • Philippe Andrade
  • Michael Wicklein

Abstract

How much of the most recent surge in inflation expectations, which began in March 2025, has been the result of the usual effect of abnormal price movements? How much is left unexplained and may signal a potential de-anchoring of inflation expectations? How do the most recent and the pandemic-era surges in expectations compare with the two surges in the Great Inflation episode of the 1970s? This brief addresses those questions using data on inflation expectations from the University of Michigan Survey of Consumers and a simple regression model in which households form their inflation expectations based on their perception of movements in food and gas prices as well as broad-based inflation.

Suggested Citation

  • Philippe Andrade & Michael Wicklein, 2025. "Why Have Inflation Expectations Surged Recently? A Historical Perspective," Current Policy Perspectives 25-14, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbcq:101908
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    References listed on IDEAS

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    1. Michael Weber & Francesco D'Acunto & Yuriy Gorodnichenko & Olivier Coibion, 2022. "The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 157-184, Summer.
    2. Ricardo Reis, 2023. "Four Mistakes in the Use of Measures of Expected Inflation," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 47-51, May.
    3. Olivier Coibion & Yuriy Gorodnichenko, 2025. "Inflation, Expectations and Monetary Policy: What Have We Learned and to What End?," NBER Working Papers 33858, National Bureau of Economic Research, Inc.
    4. Francesco D’Acunto & Ulrike Malmendier & Juan Ospina & Michael Weber, 2021. "Exposure to Grocery Prices and Inflation Expectations," Journal of Political Economy, University of Chicago Press, vol. 129(5), pages 1615-1639.
    5. Nicola Gennaioli & Marta Leva & Raphael Schoenle & Andrei Shleifer, 2024. "How Inflation Expectations De-Anchor: The Role of Selective Memory Cues," NBER Working Papers 32633, National Bureau of Economic Research, Inc.
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    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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