Media’s power extends beyond shaping current perceptions and opinions; it can also shape future expectations, for example in terms of inflation. This thesis explores whether there is a relationship between media coverage and household inflation expectations across 25 European countries spanning from 2017 to 2023. Previous literature has yielded conflicting results regarding the influence that media volume has on inflation expectations, notably only focusing on single-country contexts. 

We apply data on inflation expectations, media coverage, and economic indicators to conduct a panel data analysis using a two-way fixed effects model. The findings suggest that media volume alone does not significantly predict inflation expectations in Europe.

For policymakers, the important insight of this study is that the quantity of media does not influence the expected inflation significantly. Alternatively, policymakers should to a greater extent focus on the tone rather than the volume of media coverage. Building on our findings, future research could explore more regionalized analyses and include more countries to enhance the understanding of the critical relationship between the media and expectations of inflation.