Price Rises Perceived Much Higher Than Official Data

According to the GKI Economic Research Institute, the population perceived a 22% rise in prices, compared to the official inflation figure of 9.5% in April, which is partly due to statistical reasons, but partly to the observation methodology, the research institute told the state news agency MTI.

The researchers stressed that the perception of the population is not based on facts (price mark-up, questionnaire), but on perceptions, which may be heavily distorted by recent events.

Based upon the recent survey of 1,000 households, GKI says that the difference between official and survey inflation has averaged more than 11 percentage points per month over the past four years, and the gap is widening. This is true even though both indicators have shown a strong upward trend since mid-2021.

In its representative survey commissioned by the European Commission, the GKI also assesses the expected consumer price inflation over the next 12 months on a monthly basis. In March 2022, the population expected a 23% increase over the next year, slightly above the perceived rate of monetary deterioration over the previous 12 months.

According to the researchers, this latter pessimism is a consequence of the impact of the Russian-Ukrainian war, as in almost every month in the year before, the expected inflation rate for the coming year was lower (by 1.5 percentage points on average) than perceived in the previous year.

The researchers noted that when people perceive a much higher price rise than the official one, they react by demanding higher salaries/pensions/social benefits to keep their purchasing power up, and also expect higher returns on their investments.