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Perceived Inflation Index

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According to official statistics, the overall inflation rate for the United States through the 12 months that ended in April 2016 is 1.1%. In a new Zogby Analytics national online survey of 1005 American adults*, we tested subjective perception of how much prices have increased or decreased during the previous year. We have found that perceived inflation is much higher than the official number.

  • Median overall perceived inflation over the past year is 10%. Women perceive inflation to be higher than do men.

Overall, median perceived inflation does not vary by party and ideology and varies little by income group (8% in the 50k-100k income group compared to under 50k and over 100k income brackets) or the sense of whether the US is going in the right direction or is on the wrong track. However, women tend to perceive inflation as higher (median 10%) than men (median: 8%). Also, while high school graduates perceive inflation to be 15%, respondents with bachelor's degrees perceive it to be 8%. There is a possibility that more educated respondents might be adjusting their estimates to line up with official figures.

Consumer Price Index, which serves as a measure of inflation, measures changes in the following categories: food and beverages; housing; apparel; transportation; medical care; recreation; education and communication; other goods and services. Similarly but somewhat differently, our survey, in addition to overall inflation, gauged perceived inflation in categories of food and beverage; housing; healthcare; childcare and college education.

  • Among categories tested, median perceived inflation was highest for healthcare (12%) and lowest for childcare (8%). Overall, differences were fairly small.

We have asked our respondents to separately estimate the change in prices for the following categories: food and beverages, housing, healthcare, college education and childcare. The highest median perceived inflation was for healthcare (12%) and the lowest for childcare (8%). There were also some non-intuitive patterns in perception among different demographic groups. For example, respondents living in cities, suburbs and rural areas had similar perception of the housing inflation. On the other hand, parents or guardians of children under 17 living at home perceived childcare cost to have increased 9% while the rest perceived it to be 5%. Women perceive inflation to be higher than men in every category except for college costs.

  • Perceived overall inflation is somewhat higher among respondents supporting Trump than those supporting Hillary but is the same in most categories, except in the case of healthcare. The pattern is the same in respect to Trump and Sanders supporters.

American adults who, at the moment, would prefer Donald Trump to Hillary Clinton perceive slightly higher overall level of inflation - 9% compared to 10%. Perceived levels are identical or very close for all sub-categories except one - healthcare. In this case, Trump supporters feel the cost of healthcare has increased 15% over the last year while Hillary supporters believe it has increased 10%. Although Bernie Sanders has stressed the negative economic impact of increased college costs during his campaign, his supporters perceive no greater increase in college costs over the past year than supporters of Hillary Clinton or Donald Trump - 10%. However, once again, in the case of healthcare, the perceived cost increase is at 17%, much higher among Trump supporters than it is among Sanders supporters (10%).

  • There is little relationship between Obama approval and perceived inflation. One exception is perceived healthcare inflation, perhaps due to partisan attitudes toward Obamacare

Those who strongly approve and strongly disapprove of Barack Obama's job as president perceive overall inflation to be 10% while those who somewhat approve of it perceive it to be 8%. Those who somewhat approve of Barack Obama's job as president perceive inflation to be 9%. However, differences are much more pronounced when respondents are asked about changes in healthcare costs. Here, while those who strongly and somewhat approve of the Barack Obama's job as president perceive healthcare inflation to be 10%, those who strongly disapprove perceive it to be 15% and those who strongly disapprove perceive it to be 20%. Partisan attitudes toward Obamacare might be coloring respondents' perception of healthcare costs.

The poll of 1005 US adults was conducted online between 6/2/2016 through 6/5/16 and has a margin of error of +/- 3.2 percentage points.

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