Inflation expectations can influence the economic agents’ behavior towards consumption and investments. As such, they are an important indicator of inflation pressures and expected inflation in the economy. For central banks who have adopted inflation targeting – which is in itself a forward looking strategy – inflation expectations are also an important indicator of public confidence. If the economic agents believe that the central bank will act to move the inflation towards the objective, then the inflation expectations would be anchored close to this target, and price and wage setting would tend to remain in line. Inflation expectations are indicators of future inflation, and are therefore included in the modelling and medium term inflation forecasting process.
Inflation expectations are an indicator that cannot be directly measured by official statistics. They are estimated by different measures, the most popular of which are surveys. The Bank of Albania estimates inflation expectations by processing the data it receives from surveys on expected inflation from businesses, consumers and financial agents. More information on the respective surveys can be found in the methodological note of these surveys.
The inflation expectations are updated periodically in line with the Confidence Surveys and Financial Agents surveys. They are published on the 15th day of the following month, or the day after, if it is coincides with an official holiday.