Macro and micro pessimism as behavioral precursors of price anxiety and inflation expectations: evidence from Bulgaria’s pre-euro period

Abstract

Inflation expectations influence household behavior and policy credibility but often diverge from official data. This study explores how macro- and micro-level pessimism predict price anxiety and inflation expectations among Bulgarian households before euro adoption. Nationally representative, cross-sectional data is used - from the June 2025 European Commission Consumer Survey for Bulgaria - fielded by LOGO Market Research as part of its omnibus, within which the author inserted a brief behavioral module. Chi-square tests and independent-samples t-tests show that pessimistic appraisals of the general economy and household finances are associated with higher price anxiety, and anxious respondents report elevated 12-month inflation expectations. The pattern supports an appraisal-affect mechanism. Limitations include self-reports, single-wave design, item nonresponse for numeric perceptions, and national focus. Findings underscore the value of tracking affect alongside cognition to guide expectation-management during euro adoption.