People’s Perceptions of Inflation (A Survey Data Analysis)

Abstract

In this paper, we have presented our results from an online survey on people's perceptions of increase in price level, conducted by the authors. Based on the results, we have drawn conclusions and constructed some hypotheses which need further research to get a solid foundation. The survey has tried to explore three aspects of the associated perceptions: whether the respondents are aware of the increase in daily commodity prices or not, the reasons behind the increase in price level and the state of price level that is appropriate for the economy of Bangladesh.People’s expectations of inflation shape the future inflation of an economy. Similarly, people's take on inflation can help them build their expectations of future inflation. Therefore, studying the perspectives is important to get a more clarified picture of the future inflation. It can also help while formulating policies to control the price level or other associated macroeconomic variables. Additionally, the inspection can be a great assist to illustrate the behavioral glitch of the respondents in terms of the relation to the macroeconomic picture.We have tried to show the responses on the questions in terms of the age groups and groups consisting of respondents who have or do not have prior formal knowledge of Economics. An interesting behavior noticed in the case of the people with economics background is that their behavior is inconsistent with the modern economics theory.Age groups are divided into four categories. The research data shows that the majority of the respondents support the idea that bad governance has given them a reason to expect inflation. The least supported reason is the effect of monetary policy. People do not tend to think that much about the impacts of monetary policy. COVID-19 pandemic leads a moderate number of respondents to formulate their perceptions on inflation. A highly negligible portion of respondents has said that they were not aware of the recent increase in the price level of daily commodities. A few hypotheses have also been developed from the analysis, which are mentioned in the discussion section. Further investigation is necessary to establish a statement in these cases.An interesting fact derived from this survey is that an important portion of people thinks that an increase in the price level to a limited extent is good for the economy of Bangladesh. Except for age group 3 (31-40), majority of all the groups support this idea. However, this inconsistent behavior among the age group 3 can be neglected since the more responses are necessary to establish this inconsistency as a significant issue. The second most supported appropriate inflationary state for the respondents is the decrease in price level.The responses were collected through Google Form. The data analysis and cleaning were performed using spreadsheet software.