Inflation Expectations and Inflation Forecasts

The inflation rate is derived from the annual rate of change in the Consumer Price Index.  The CPI measures the rate of change over time in expenditure required to purchase a fixed basket of products and services, the prices of which can be regularly measured.  This basket represents households’ consumption.  The Index mainly serves for various indexations, setting cost of living increases, wage rates, and analysis of price trends in the economy.

Inflation expectations are gathered and calculated from various sources: the capital market, CPI-indexed contracts, the banks’ internal interest rates, and forecasters’ projections.  The expectations are calculated for various ranges, and are an important indicator for monitoring the development of inflation.