In South Africa, one-year ahead inflation expectations have tended to be above actual inflation. Today’s post compares historical bias in inflation expectations across the world over the last decade or so. In the Czech Republic, Mexico and New Zealand, inflation expectations have often been below inflation outcomes, while they have tended to be much higher than inflation outcomes in India and Russia. Wedges between inflation expectations and inflation outcomes have been higher in Australia, Sweden, South Korea, the United States and Canada than in South Africa.
Footnote
Note that Canada and Japan’s comparisons starts in 2015 and Russia’s in 2014. The chart below presents a summary using a longer time span for countries that have longer data samples and the second creates a comparison using rolling averages of inflation outcomes instead of matching inflation expectations with t + one year inflation outcomes.
