An ECB Economic Bulletin analysis finds that the degree of attention people give to inflation in the news significantly affects inflation expectations, price-setting, and wage negotiations. Using a dictionary-based method on over 3 million newspaper articles from France, Germany, Italy, and Spain, researchers built an Inflation Attention Index. At its 2022 peak, attention was up to five times higher than the 1997–2011 average, closely tracking actual inflation trends.
The study shows that while inflation rates have stabilised near the ECB’s 2% target, media coverage remains elevated, especially on food inflation (still over 3% in August 2025). Consumers’ perceptions of inflation adjust slowly: they respond strongly when prices rise but are slower to recognise declines. This mismatch sustains elevated short-term expectations even as actual inflation falls. News coverage was found to correlate strongly (0.85) with perceptions and expectations, suggesting that media intensity prolongs inflationary memory.
For India, where inflation expectations strongly influence household spending and wage bargaining, the findings underline the need for the RBI and Ministry of Finance to consider media narratives and public perception as part of monetary communication. Even when inflation stabilises, persistent attention in the news can shape behaviour and delay anchoring of expectations.
Follow the full article here: Monitoring attention to inflation in the news
