The extent of the Israeli public’s familiarity and proficiency with the topic of inflation: Results of the survey

Within the framework of the process of renewed examination of the inflation target, being carried out by the Bank of Israel, the Bank conducted a survey (with the assistance of the “Rushinek” company) to learn the extent of the Israeli public’s familiarity and proficiency with the topic of inflation and the inflation target.

 

To carry out the examination, an online survey was conducted among 1,027 respondents. These respondents are a representative sample of Hebrew-speaking Israelis ages 18–64, who are connected to the Internet.

 

The survey was conducted in the first half of April, a period in which there was a rapid increase in the inflation rate, and in particular close to the inflation rate crossing the upper bound of the inflation target. It is very likely that at least part of the results of the survey were impacted by these developments, and the survey findings should be examined from this perspective.

 

The survey indicates that the public views inflation across the board as something negative. In terms of the public’s awareness of changes in the CPI, it was seen that the public identifies price increases in a manner consistent with the measurements of the Central Bureau of Statistics, and in particular it can be seen that the public pays greater attention to items purchased on a more frequent basis, such as food and fuel for cars.

 

The survey’s findings indicate that there is broad familiarity among the public on the concept of inflation but there is limited familiarity with the concept of the inflation target. Approximately 87 percent of the public knows well or partially what inflation is, but only 10 percent of the public can note the inflation target. Despite this, there is relatively high awareness of the policy tools used by the Bank of Israel. About half the public in Israel is familiar with the tools used by the Bank of Israel to impact on the inflation rate to converge to within the inflation target range. With that, 37 percent of the public is aware of the Bank of Israel’s responsibility for maintaining the inflation rate within the target bounds, but the public also sees the government—particularly the Ministry of Finance—as the entity responsible for maintaining the inflation rate within the target bounds. This finding reflects the importance that the public sees in responsible fiscal policy alongside monetary policy in maintaining the inflation rate. Despite the public’s view of the government as well as an entity responsible for the complying with the inflation target, the trust in the Bank of Israel is high, with only 7 percent of the public being of the opinion that the Bank of Israel cannot at all prevent significant increases or decreases in prices.

 

Also indicated is that the public is sensitive to high inflation. About 36 percent of the public prefers that the inflation target remains at its current level of 1–3 percent (despite, as noted, only 10 percent of the public knowing that this is the inflation target), about 36 percent noted that the inflation target should be lower than its current target, and only 8 percent are of the view that the inflation target should be higher than its current level. In addition, about half the public believes that the Bank of Israel has to prevent both significant increases and decreases in the inflation rate. In parallel, about 40 percent of the public believes that the Bank of Israel has to prevent only significant increases in the inflation rate, while only 2 percent of the public wants the Bank of Israel to prevent only significant decreases.​