Abstract

We establish five facts of how households, firms, social partners (employer organizations and trade unions), and economists (professional forecasters and academics) form inflation expectations using data from a harmonized survey over the same time period from Norway having data both pre and post inflation surge: (i) Households’ inflation expectations are typically the highest, followed by firms but the latter groups’ average expectations exceeded those of households starting in 2022, whereas social partners and economists form expectations similarly; (ii) a similar pattern arises for disagreement with firms’ disagreement surpassing households’ in 2022 with important roles for sales and purchasing prices forecasts; (iii) in normal times, we observe a flat term structure of inflation expectations but it became negatively sloped during 2022, especially for households; economists working in financial institutions have the most anchored expectations; (iv) the pass through of inflation expectations to wage growth expectations is substantially below 1 for all agents but increased substantially for firms and economists during the inflation surge; (v) we causally link electricity price shocks to inflation expectations and find a large pass through.