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Empirical Analysis of the Difference between Measured and Perceived Inflation in Japan

This study by Makoto Shimizu delves into the difference between measured and perceived inflation in Japan, focusing on CPI changes, perceived inflation characteristics, quality adjustments, purchasing frequency effects, and the overall impact. The findings reveal that perception gaps are mainly due to quality adjustments, purchasing frequency, and recent price changes. As user demands for detailed CPI information rise, the study suggests occasional experimental indices to illustrate perceived inflation. Further empirical analyses on quality adjustments are recommended.

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Empirical Analysis of the Difference between Measured and Perceived Inflation in Japan

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  1. Empirical Analysis of the Difference between Measured and Perceived Inflation in Japan Makoto ShimizuDirector, Economic Statistics DivisionStatistical Survey Department, Statistics Bureau, Japan

  2. Outlines • Characteristics of Recent Change of the CPI • Characteristics of Recent Perceived Inflation • Effects of Quality Adjustments • Effects by Frequency of Purchases • Total Effects of Quality Adjustments and Frequency of Purchases • Conclusion

  3. Conclusion • The gap in perception inflation from measured inflation is mainly caused by three factors; quality adjustments, purchasing frequency and price changes of the nearest time period, all of which can be evaluated quantitatively to some extent and pictured by recompiling data used for the CPI. • As far as needs of users of more detailed information on the CPI have increased, it is beneficial to provide an experimental index occasionally to show the perceived inflation formed from components of the CPI, with explanations regarding the index and surroundings. • Further detailed empirical analyses to evaluate effects by quality adjustments are necessary.

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