Examining the determinants of consumer perception of inflation

This study examines the determinants of consumer perception of inflation in 2023 using the survey data collected from Moroccan, Turkish, and Italian households. Uncovering the determinants of perceived inflation is important to make effective communication strategies and monetary policies. While previous studies explored explanatory factors such as living standards, region, professional status, age, marital status, and psychological factors, this research focuses on the effect of media influence, peers'influence, consumer sentiment index, memory, and past perceptions of inflation, alongside age, gender, marital status, education, professional status, living standard, savings, and inflation knowledge. The study collected survey data online. It utilized two regression models—a multiple regression model estimation of perceived inflation and an ordered probit model to evaluate the consistency of results with the multiple regression. The empirical results indicate that perceived inflation across Turkey, Morocco, and Italy is impacted by various factors, including education level, living standard, media influence, inflation knowledge, and past perceptions of inflation. These factors are common across the three countries. However, when examining country-specific differences, there are some variations. For instance, while factors such as peers' influence, media, and past inflation perceptions play significant roles in shaping perceived inflation in Turkey, various factors such as consumer sentiment index, memory, peers' influence, and past inflation perceptions are more influential in Morocco. In Italy, factors such as media, memory, and past inflation perceptions have a notable impact on perceived inflation. The distinctions through countries indicate the importance of considering socio-economic and cultural factors unique to each country. Policymakers should consider the role of inflation education campaigns, media and peer influence in shaping inflation perceptions and leverage these channels to spread accurate information, thereby, greater public understanding and more confidence in monetary policy decisions.