Empirical Analysis Of Factors Leading To The Heterogeneity Of Inflation Perceptions

Controlling inflation is always one of the goals of monetary policy. The academic circles and the government authorities mainly discuss the effect of inflation expectations on inflation, ignoring that of inflation perceptions, which is the essential factor underlying inflation that affects inflation expectations and inflation rate, when they deal with inflation. Each quarter, the People’s Bank of China conducts an urban depositors survey among 20000 households in 50 cities nationwide. The results show that the inflation perceptions are heterogeneous, different people have different feelings about inflation, which contradict the traditional economics hypothesis of "homogeneity". The heterogeneity of inflation perceptions is bound to cause the heterogeneity of inflation expectations, increase the difficulty of management of inflation.The inflation perception is a subjective feeling, which is a complex psychological activity that is influenced by many factors, not only affected by psychological factors, but also affected by external factors. Based on the formation mechanism of inflation perceptions, this paper constructs a comprehensive model to comprehensively and integrated analyze the factors leading to the heterogeneity of inflation perceptions from three aspects, which are personal characteristics, psychological factors and dynamic adjustment factors(external factors) respectively.Data related to inflation perceptions and personal characteristics is acquired by a questionnaire conducted among citizens in 17 cities nationwide. By using the idea of cumulative logistic model as the empirical methodological approach, this paper empirically analyzes the factors that lead to the heterogeneity of inflation perceptions through the psychological and external information aspects of the formation of inflation perceptions. The results show that income satisfaction, food price, rent and marketing are the principal factors having significant effects on the heterogeneity of inflation perceptions. So, the government should enhance income satisfaction, stabilize prices, regulate houses price and rent and intensify efforts to spread economic knowledge in order to lower the heterogeneity of inflation perceptions.