Bias in Survey Based Inflation Expectation: A Developing Country Perspective

doi: https://doi.org/10.35536/lje.2026.v31.i1.a2

Ali Inayat and Saima Naeem



25
Received
August
2025
04
Revised
May
2026
10
Accepted
June
2026
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Abstract

We studied the impact of phrasing on consumer inflation expectations in Pakistan using an online survey. Our results imply that optimal phrasing of the question can significantly reduce bias in responses. When the question is asked as an absolute change from PKR 100, responses are high and volatile, with many in multiples of tens and fifties. Moreover, we studied the impact of closed-ended questions on inflation expectations and found that responses to closed-ended questions suffer from central tendency bias. Our study also confirms the impact of information on the formation of inflation expectations. When presented with information about current inflation levels, respondents tend to lower their inflation expectations. Literature provides two possible reasons for this: information bias or social bias.

Keywords

Inflation, expectations, bias, Pakistan

Citation:

Inayat, A., and Naeem, S., (2026). Bias in Survey Based Inflation Expectation: A Developing Country Perspective. The Lahore Journal of Economics, 31 (1), 31–50.

https://doi.org/10.35536/lje.2026.v31.i1.a2