The Bank for International Settlements published research compiling international survey evidence on household sentiment and inflation expectations after the post-pandemic inflation surge. It finds that household inflation expectations remain elevated even as observed inflation has moved closer to central bank targets, and that expectations are closely linked to perceived cumulative price increases and to how well households understand central banks and their price stability mandates. In a BIS survey run between 24 March and 28 April 2025 across 29 advanced and emerging market economies, households’ median expected inflation over the next 12 months averaged about 8%, versus a 2.4% average current inflation rate. Respondents placed the highest plausible 12-month inflation outcome around 11% and the lowest around 4%. Median perceived cumulative price increases were about 9% in 2015–19 and 18% in 2020–24, while almost 20% of households reported perceived post-pandemic price level gains above 30%. Commodity prices and pandemic-related shortages were the most commonly cited drivers of the inflation surge, and central banks were ranked last among proposed causes; central banks were also reported to enjoy higher public trust than governments. Separate analysis of IPSOS sentiment data (2010–24) indicates sentiment is negatively correlated with inflation and is additionally dragged by price level increases over longer horizons. At the household level, a 1% higher perceived price level increase over 2020–24 is associated with a 0.12 percentage point rise in expected inflation, while recognising the central bank and identifying price stability as its goal are associated with 2.3 and 1.2 percentage point lower inflation expectations, respectively; only about 60% of households recognise their central bank and 49% link it to a price stability objective. TV and radio are the most used sources of information about central banks (56%), with social media the second most used. The bulletin concludes that audience-centric central bank communications and broader financial literacy efforts, delivered across traditional media and social platforms, can help improve public understanding of central bank mandates and support the anchoring of inflation expectations.
Bank for International Settlements 2025-06-16
Bank for International Settlements survey finds households still expect about 8% inflation despite rates nearing targets
The Bank for International Settlements published research showing household inflation expectations remain high despite observed inflation nearing central bank targets. A survey across 29 economies showed median expected inflation at 8% over the next 12 months, with perceived cumulative price increases significantly impacting expectations. The study suggests enhancing central bank communications and financial literacy to better anchor inflation expectations.