Mismeasurement of inflation is likely to be more severe in a transition economy than in a more stable environment. Comparisons of self-reported changes in economic welfare with changes in incomes suggest that official Romanian inflation measures may be overstated by between 100 and 400% at a reported annual inflation rate of 40%. J. Comp. Econ., September 2002, 30(3), pp. 476-487. Hunter College and The Graduate Center, The City University of New York, 695 Park Avenue, New York, New York 10021; and CERGE-EI, Czech Republic; and CERGE-EI, Politickych veznu 7, 111 21 Prague 1, Czech Republic. (C) 2002 Association for Comparative Economic Studies. Published by Elsevier Science (USA). All rights reserved.Journal of Economic Literature Classification Numbers: C8, E3, P2.