This paper analyses divergences between actual, perceived and expected inflation in the euro area over the 2020-25 period. It identifies substantial inertia in both inflation perceptions and expectations, leading to cyclical biases over the inflation cycle. The analysis shows that expectations are more stable and more closely associated with economic decision-relevant beliefs than perceptions. These dynamics are linked to wage adjustment patterns and the distributional effects of inflation, while trust in the ECB remained broadly stable throughout the period. This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 26 February 2026. Source : © European Union, 2026 - EP Read more