Inflation expectations of the general public under supply constraints : evidence from a survey experiment

This paper examines the causal effect of supply constraints on inflation expectations, using a survey experiment conducted with a representative sample of German adults. Respondents first reported their prior beliefs about both official and personal inflation. They were then presented with information about Germany's 2022 supply bottlenecks and randomly assigned to one of three hypothetical scenarios for 2025: a temporary shortage, a prolonged shortage, or no shortage. Following the treatment, we recorded their updated inflation expectations. Exposure to either shortage scenario significantly increased the likelihood of revising both official and personal inflation expectations by almost 10%. However, the average effects and belief-updating mechanisms differed markedly between the two. Personal exposure to supply shortages in daily life and financial literacy also influenced how respondents revised their personal expectations. Finally, a topic analysis of open-ended responses offers further insights into how people interpret and react to perceived product scarcity.