Inflation in Russia: Differences Between Official Data and Population's Perception

Abstract

The article is devoted to the study of the reasons for the formation of differences between the official measurement of inflation in the Russian economy and the subjective perception of inflationary processes by the population.The introductory part of the article shows that the population's estimates of inflation in Russia (perceived inflation) are more than twice as high as official data. There is no consensus in the scientific literature on the explanation of this bias, which determines the relevance of the study. Due to the high level of observed inflation, households may believe that the real yield of financial instruments is negative and prefer consumption to savings, including through loans. The purpose of the article is to determine the causes of discrepancies between official inflation indicators and estimates of price growth for goods and services by the population.The main part of the article analyzes the time series of the Rosstat consumer price index from 2014 to 2021, data from the Bank of Russia on inflation perceived by the population, macroeconomic indicators of the International Monetary Fund, including the dynamics of price indices of 12 groups of goods and services in 86 countries. Methods of descriptive, correlation and regression analysis were used. There are two main cognitive reasons why the level of inflation perceived by the population exceeds the official one. Firstly, in the course of surveys, according to the author, respondents often incorrectly determine the time frame (perceiving the price increase not for one year, but for a period of about two years). Secondly, the population (households as respondents) pays attention primarily to the goods that have risen in price most significantly (further increasing the gap in estimates). In addition, the population perceives the end of discounts on individual goods as a multiple overall price increase. Based on a cross-country comparative analysis of price indices, the author suggests that the increase in the variability of the relative price index leads to an increase in discrepancies between official inflation data and estimates of inflation by the population.In the final part of the article, conclusions are formulated – the author's positions on the problem under consideration, according to which it is proposed to increase the financial and statistical literacy of Russians in order to reduce differences in estimates of inflation by official statistics and the population.