inflationary psychology

Inflationary Psychology

The relationship between inflation and individuals' behavior.

Notes:

For example, in times of higher than average inflation, consumers have a higher likelihood of borrowing to buy things because they are assuming goods will cost more tomorrow than they do today. Consequently, this increased buying only exacerbates inflation.

See also: CPI, Deflation, Disinflation, Fed, Hyperinflation, Inflation, Inflation-Indexed Security, PPI, Reflation, RPI, Stagflation, Stagnation, Treasury Inflation Protected Securities (TIPS)

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inflationary psychology

Consumers' belief that prices will inevitably rise, a belief that drives them to speed up purchases especially of real assets (that is, gold, diamonds, and real estate) and avoid investment in financial assets (that is, stocks and bonds). As a result, the consumers themselves can cause the inflation that they fear will occur.