Inflation illiteracy - a micro-data analysis

Using micro-level survey data from the National Institute of Economic
Research’s Economic Tendency Survey, we find that a relatively large
share of Swedish households is ill-informed about the rate of inflation in
the economy, with perceived and expected rates of inflation deviating
substantially from official measures. Probit analysis of the data indicates
that such inflation illiteracy is related to respondent characteristics,
including income, education and sex. Finally, we show that the treatment
of extreme-value answers has a substantial effect on the aggregated time
series typically reported and discussed.