What the latest surveys show
Household expectations for inflation rose again in September, and that has brought a familiar question back: why does inflation feel higher than official figures? The New York Fed’s Survey of Consumer Expectations, dated 7 October 2026, puts median one-year-ahead inflation expectations at 3.9%, the highest since May 2023. Disagreement between respondents also increased at all horizons.
These are expectations, not measured inflation. A 3.9% expectation means respondents think prices will rise about that fast over the coming year, not that they already have.
The University of Michigan’s October 2026 reading, which is preliminary, puts year-ahead expectations at 4.7%. Its final release is scheduled for 23 October 2026, so treat that figure as provisional. In the euro area, the ECB’s Consumer Expectations Survey for March 2026 put median perceived inflation over the previous 12 months at 3.5%. The Cleveland Fed reports that firms’ own expectations have stayed somewhat elevated relative to realised CPI.
Falling inflation is not falling prices
Inflation is the rate at which prices rise. When it falls, prices are still climbing, just more slowly. The St. Louis Fed makes this point in a 2024 explainer: a decline in the inflation rate does not mean prices fall. It is an old and widely repeated point, not new information, but it explains how “inflation is down” and “things still cost more” can both be true. Someone who paid a certain amount for groceries three years ago is still paying a higher level today, even if this year’s increase was smaller than last year’s.
The official number is an average, not your bill
The consumer price index tracks a fixed basket of goods and services, weighted to represent an average urban household. Nobody’s spending matches that mix exactly. The BLS factsheet on averages and individual experiences notes that published averages do not always match an individual’s experience, and that regional indexes may not mirror local prices.
The gap is built in. If energy or housing takes a larger share of your budget than it does in the average basket, your personal inflation rate can run above the headline even when the headline is accurate. Check current BLS category weights rather than older published figures, which may no longer be current.
Why frequent purchases dominate memory
People notice prices they see often. Food, clothing and gasoline are bought regularly and swing seasonally, so their changes are hard to miss. A replacement appliance is bought rarely, and a price change there registers less. The BLS factsheet describes this pattern of attention.
Research goes further, though less firmly. A laboratory study, circulated as a working paper, reports a “frequency bias”: participants gave more weight to changes in frequently purchased goods when judging economy-wide inflation. A Danish study using survey and register data finds some respondents appear to have food prices in mind when asked about inflation, rather than consumer prices overall. Both results are suggestive. Neither establishes how large the effect is in everyday life.
Households pay different prices for the same goods
Inflation also varies from one household to the next. A US study using Kilts-Nielsen scanner data finds that much of the variation in household-level inflation comes from the prices households pay for the same goods. It also finds that lower-income households experienced higher inflation on average. Most cross-household variation, however, is not explained by observable traits.
Other countries look different. A CEPR column on France and Germany finds that differences in prices paid, from coupons, searching and personalised offers, play a largely negligible role there, while spending allocation across categories matters more in Germany. The column says US evidence points the other way. The research is not yet a settled ranking. For one category examined in detail, see why electric bills are rising in 2026.
What is established and what is still contested
Three points are on firm ground: the price level and the inflation rate are different things, the official index uses an average basket, and frequently bought items draw outsized attention. What is not established is the relative size of each effect, and no single cause has been identified.
Several other claims are thinner. An Economic Voice column by Francis, citing NBER Working Paper 35354, argues that the gap between perceived and official inflation widens during economic stress. That working paper was not reviewed for this article, so read the claim as reported rather than confirmed. A Bank of Canada explainer notes that perceived inflation responds more to rising prices than to falling ones. That connects to the debate over loss aversion, though it is a related idea rather than a proven cause of the gap.
A commentary piece on economy.ac offers an illustration of level versus rate: it reports that Canada’s annual average CPI rose 2.1% in 2025, while prices were 19.9% higher than five years earlier. Memory is another possible factor. Households may remember the prices they paid, and that memory fades slowly, so a price level that has since eased can still feel incomplete. That is a plausible framing, not a measured result. A China-specific study links housing appreciation to perceived pressure running below the CPI, but its full method was not checked for this article.
What you can check yourself
- List the categories you spend the most on and compare them with current BLS weights. A heavy share in one category means that category matters more to you than the headline.
- Track the items you buy most often, such as groceries, fuel and transport, over a full year rather than a single month.
- Compare price levels, not just the headline rate. Ask what a typical shopping list cost you three years ago.
- Read the method of any alternative living-cost index before relying on it, since different indexes use different baskets and weights.
The fixed basket is deliberate. Official statistics keep the same basket so the series stays comparable over time. A personal basket would track your own life more closely, but it could not show a consistent national trend. The useful question is not whether the official number is wrong, but which part of your own spending it does not describe.