Price expectations in the European Union: is there a consensus?

This study examines the strength of the consensus on the expected prices across the European Union (EU) countries with respect to various factors: seniority in the EU (‘old’ vs. ‘new’ EU Member States, i.e. those that joined the community in 2004), the size of the economy (small vs. large) and currency cohesion (eurozone vs. local-currency countries). The results show that the lowest consensus on expected prices and relatively little variation in such a consensus occur in the ‘old’ EU countries. Opinions on the direction of the expected price changes vary substantially, but this variation remains stable in time. For almost every EU country, the consensus on the expected prices is higher in the ‘regular times’ subsample than in the ‘pandemic and war’ subsample, and for many countries, the differences in the strength of the consensus are larger for the ‘pandemic and war’ subsample. As far as the correlation with the observed price changes is concerned, the highest correlation coefficients are noted for small economies. Analysing correlation coefficients across subsamples shows that during difficult times of the pandemic and war, seniority in the EU helps the respondents to predict the direction of the expected price changes more in line with the actual price developments.