Inflation has always been a topic that is in the focus of the media and the wider public. In a free market economy, the prices of goods and services are not constant but continuously changing. Some products become more expensive, while others become cheaper. Therefore, the purpose of this thesis is to explore how Croatian citizens perceive inflation, how they experience price increases, and how it affects their behavior. The goals of this thesis are to analyze the causes of inflation during different periods of Croatia's economic development, identify the factors that influence perceived inflation, analyze the effects of perceived inflation on consumer behavior, and based on the research conducted, analyze Croatian citizens' perception of inflation to determine the differences between perceived and actual inflation. For the purposes of this thesis, a survey was conducted on a purposive sample of 315 Croatian citizens. The research was carried out online through a questionnaire created using Google Forms. The results showed that, despite respondents being well-informed and educated about basic economic concepts related to inflation, they perceive inflation to be higher than it actually is. Almost all respondents believe that the introduction of the euro as the new currency has contributed to the rise in inflation. They also feel that global events, especially political and economic crises, have a significant impact on inflation. As the best solution for reducing inflation, respondents highlight temporary price controls and improvements in market competition. There are various reasons why inflation influences consumer behavior and their perceptions, which in turn affects their subjectivity when forming opinions about inflation. The results of the research can contribute to a better understanding of inflation perception and consumer behavior, specifically uncovering the differences between consumer perceptions and reality.