A new ECB blog, drafted by the bank’s top economists and researchers, has suggested that globally, women tend to have higher inflation expectations than men.
The piece, based on a consumer expectations survey released in July, noted a 1 per cent gap between inflation expectations of men and women.
In trying to explain this stark gender gap, the ECB noted that while “as humans we absorb news the same way regardless of gender”, our inflation perception often starts with personal experience in everyday life situations.
“As consumers, we observe and focus on prices we encounter in our daily routines. We extrapolate these to broader inflation perceptions and eventually shape our expectations for future inflation,” the ECB’s principal economist, Virginia Di Nino; research analyst, Aleksandra Kolndrekaj; and senior lead economist, Aidan Meyler, said.
“This is why our heterogeneous preferences and shopping habits influence the way we perceive and expect inflation to develop. And it might shape perceptions and expectations for women and men differently, also depending on their age,” they continued.
Food fueled women’s perceived inflation, with the greatest disparity within a single category being in that area.
A 1 per cent increase in perceived food inflation is estimated to increase women’s short-term expectations by 0.40 percentage points. The impact on men’s expectations were found to have a 0.14 per cent difference, with 0.26 per cent.
In contrast, looking toward inflation over the next 12 months, men were found to place most emphasis on developments in transport, clothing and housing. This divide, the ECB noted, could reflect the allocation of household chores between men and women.
Moreover, the ECB found that women are also more likely to report round numbers in their inflation expectations.
“Women are more likely than men to report multiples of 10 or of five, whereas men are more likely to report either single non-rounded digits or even decimal places,” Ms Di Nino, Ms Kolndrekaj, and Mr Meyler said.
“There is also evidence that those who have a negative attitude about the economy tend to be more uncertain about the inflation outlook and to report rounded and higher inflation expectations,” they added.
Touching on the importance of this data, the ECB suggested that breaking down these patterns can inform central bankers on what type of inflation matters most to men and women.
“It enhances the analysis of the macroeconomic implications of monetary policy decisions and thus ultimately, it builds up central banks’ credibility,” ECB experts said, adding that gender differences ultimately underscore the need for banks to adopt differentiated communication strategies which can speak to specific experiences.
