Do consumers actually monitor the inflation rate? Evidence from New Zealand*

Abstract

In this note, we study whether consumers actually monitor the inflation rate, an assumption that is often made in studies on inflation perceptions and expectations as well as policy analyses. We analyse this question using unique representative survey data on New Zealand collected in 2016. In this case of an inflation targeting country and an environment of low inflation rate, we find that only about one third of the population says that it monitors the inflation rate. These are people characterised by a significantly higher degree of objective and subjective economic knowledge as well as interest in monetary issues.