Determinants of perceived inflation in Algeria: an empirical study

Abstract

This study aims to assess the determinants of inflation perception in Algeria. A survey of 32 items was held online on February 2022 where respondents were questioned about their perception for the last twelve months as well as their characteristics and behaviour. Collected data has been analysed using two Probit models. The results revealed that perceived inflation is affected by socio-demographic characteristics, especially age and education degree while knowledge about inflation rate doesn’t have a direct effect on it. Psychological factors also play an important role as price decrease awareness contribute to lower perceived inflation while individuals who doesn’t usually buy goods tend to report lower perceived inflation too. Atypical results have been found for consumer behaviour effect, as a more intensive search on internet translates in higher inflation perception while the use of cash card contributes to lower it. Finally, economic condition also plays an important role, as individuals with a kind of financial distress are more likely to report higher perceived inflation. Thus, perceived inflation in Algeria highly differs from official statistical rates due to many factors specific to each individual.