Households’ perception of price changes not in line with reality

THE YEAR of 2014 was exceptional for Slovakia in regard to prices when these did not even increase, but rather decreased.

(Source: Sme)

Nevertheless, perception of Slovak households is the opposite. While prices of goods and services shrank by 0.1 percent in 2014 on average, as much as about three fifths of households believe that prices went up last year. Jana Glasová, analyst with Poštová Banka puts as a reason the so-called apparent inflation, which is always higher than what is real.

“Said in other words, consumers usually have a feeling that the increase in prices in shops is more significant than it really is,” Glasová writes. “This is because we have a tendency to leave a drop in prices almost unnoticed and exaggerate their raises. Apart from this, perception of prices is always subjective and depends on the composition of the ‘shopping basket’ of each of us, because in shops we always find goods whose prices are growing as well as those that are decreasing.”

Only roughly one tenth of Slovaks share the opinion that prices decreased last year and one quarter of Slovak households believe that the price level did not change, Glasová writes based on the latest data of the Slovak Statistics Office.

For 2015 three fifths of Slovak households believe that prices will increase, while it is expected that prices of goods and services will actually rise. Glasová specified that the average inflation for this year should be some tenths of a percent.

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