Do you feel as if the things you buy every day are getting more expensive?
If you live in North America or Europe, your local central bankers might be pleased to hear that. And it's not because they want you to suffer.
Instead they hope that if you expect inflation when the latest numbers come out next Wednesday, that's what's going to happen.
This week, Canadians get a fresh perspective on where inflation is heading through a brand new set of data coming from the Bank of Canada later today. And while most of us dislike rising prices, odds are economists at the European Central Bank and the U.S. Federal Reserve will be very jealous of Canada's numbers.
At the end of last week, the vice-chair of the Fed, economist Richard Clarida, warned that the U.S. central bank would have to keep struggling against what he called "global disinflationary pressures."
What did you expect?
While the central bankers' fear of falling prices seems to be abating, many, like Clarida, worry that a slowing rate of price growth — where prices rise, but well below the two per cent inflation target — will gradually take the world back to its nemesis, deflation.
At its last interest rate announcement, the Fed said it would keep interest rates on hold in 2020 after a series of cuts. But the Fed vice-chair then hinted last week that more cuts might be needed.
"The global disinflationary pressures which I referred to are very powerful forces and policy needs to factor that in in setting policy to get inflation up to the objective," said Clarida.
Most economists used to imagine inflation in a relatively simple, mechanical way: Based on the idea of the Phillips curve, strong employment leads to higher inflation, and cutting interest rates makes prices rise.
But now there are increasing doubts about those relationships.
Instead, much more weight is given to inflation expectations. In other words, if you and all your friends think prices won't rise, they won't.
It is a strange and circular argument, but research partly financed by the Bank of Canada has shown it has a basis in fact.
New data on consumer views
Unbeknownst to most Canadians, the central bank has been collecting data on our inflation expectations since 2014. It will publish some of that information later today in its first Canadian Survey of Consumer Expectations.
The data — based on consumer interviews with a rotating cast of 1,000 heads of households — probes not just what inflation will be at the next release, but consumer expectations for the months and years ahead.
"Since expected inflation influences current wage negotiations, price setting and financial contracting for investment, it is one of the main drivers of current inflation," reads a 2015 report explaining how the survey works.
But as Bank of Canada governor Stephen Poloz explained last week, adjusting those expectations once they have become deeply rooted in consumer thought is not necessarily easy.
"You make a forecast of inflation one to two years from now and ask where that's going to be relative to your target," said Poloz, outlining how the bank tried to bend expectations, and thus the eventual rate of inflation.
But, as he explained, that depends where the current rate is relative to the target, and whether the economy is strong or if it is weak, needing stimulus.
In Canada, inflation expectations likely currently sit slightly above the bank's two per cent target rate (though we will find out today), and the central bank is in a relatively happy position.
Theoretically, if needed, the bank should be able to nudge those long-term expectations up or down by nudging interest rates lower or higher respectively.
That is not so easy in other places, such as parts of Europe, where even low and negative interest rates have failed to push prices up in any substantial way.
There are things that could trigger inflation expectations, such as a sudden economic boom in some part of the world, or, as we saw last week, the threat of war that would cause emergency spending and perhaps shortages of raw materials, if oilfields were cut off, for example.
But far more worrying for central bankers in countries where both inflation expectations and interest rates are low is what they will do if a new recession that many worry may still be around the corner were to make an appearance.
Whereas Canada would still have room to cut and stimulate the economy with lower interest rates, others would once again face the distorting effects of other forms of stimulation, from negative interest rates to bond buying, which have proved less successful in practise than many economic theorists had hoped.
Follow Don on Twitter @don_pittis