Inflation Expectations Index and its components

Inflation expectations are determined on the basis of questions included in the monthly Omnibus survey conducted since December 1991 on a representative random-quota sample of 1000 Poles aged 15 and above.

• The Inflation Expectations Index is calculated on the basis of the following question:

“Seeing what is currently happening, do you think that over the next 12 months prices will...:”

• grow even faster than they are now
• grow at the same rate 
• grow at a slower rate
• remain the same as they are now
• be lower
• (do not read out) hard to say

Consumers’ opinions regarding current and future inflation tendencies are divided in a standard manner into optimistic (positive), neutral and pessimistic (negative). The Index is constructed using the balance statistics method, i.e. the percentage of negative answers is subtracted from the percentage of positive answers, and 100 points are added in order to ensure a positive scale of values. For example, an Index value of 96 means that the advantage of those with a pessimistic outlook on the future over those seeing the future in a positive light is 4% of the general Polish population over 15 years old. A value of 150 on the other hand is interpreted as a 50 percentage point advantage for those optimistic about changes in prices over those with pessimistic views.

Answers classed as positive are “prices will grow at a slower rate”, “prices will remain the same as they are now” and “prices will be lower”, while the answer “prices will grow even faster than they are now” is classed as negative. The answer “prices will grow at the same rate” is treated as neutral.