Higher inflation expectations lead to increased spending on durable goods.
Households who expect inflation to rise are more likely to buy durable goods. A study using German data from 2000 to 2013 found that when inflation expectations unexpectedly increased due to a tax hike, people were more willing to spend on durable items. This effect was stronger for educated, working-age, high-income, and urban households. The findings suggest that policies boosting inflation expectations could help boost consumer spending.