Recent surveys show that despite a significant decline in consumer inflation rates, voters remain concerned about inflation. The disparity in perception can be attributed to the way humans think about inflation, as explained by Paul Donovan, chief economist of UBS Global Wealth Management.

Donovan illustrates this by using the example of Snickers bars. While the price of a Snickers bar is not a significant portion of most families’ annual budget, it is a high-frequency purchase, with over 12 bars sold every second in the United States. On the other hand, items like televisions, which constitute a larger portion of the budget, have a lower frequency of purchase. As a result, consumers are more likely to remember the price of a Snickers bar and forget the price of a television bought last year.

This selective memory leads to a misconception about inflation rates, as consumers tend to focus on the prices of high-frequency purchases such as food and fuel, rather than infrequent purchases. The weighted calculation of inflation, based on consumer spending, prioritizes items like televisions over Snickers bars, contributing to the discrepancy between actual inflation rates and consumer perception.