Consumers' subjective perception of price in times of inflation

This article suggests that inflation blurs the information content of prices, affecting consumers' subjective perception of prices. Preliminary evidence is provided by examining consumers' upper and lower price limits—concepts closely related to price quality perceptions—under extreme inflationary conditions taking place in Israel in 1980. The findings indicate that lower price limit distributions exhibit consistently greater dispersion across three income groups and the overall sample, compared to upper price limits. This effect is attributed to consumers' greater difficulties to provide lower price limits which are based solely on quality judgements, compared to upper limit responses which are partly anchored in more clearly defined budget constraints.