Inflation
Official vs. true vs. perceived inflation

The true inflation is one percentage point lower than the official one, according to research. Therefore, the 2% inflation target is needed to prevent the true inflation being close to zero or even deflation. The reasons are the following:

Nevertheless, people overestimate the inflation even vs. the measured inflation. This is because they focus more on commonly-bought items than on durable goods, and more on price increases than on price decreases.

On the other hand, different people have different shopping baskets and hence face different inflation rates.
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