Inflationary episodes fundamentally alter the economic landscape within which consumers make purchasing decisions, yet the psychological and behavioral mechanisms through which inflation shapes price sensitivity and value perception remain incompletely theorised. This paper presents a mixed-methods investigation examining how sustained inflationary pressure reconfigures consumer price sensitivity, perceived value, and willingness to pay across product categories. Drawing on a quantitative survey of 487 adult consumers combined with 32 in-depth qualitative interviews, the study integrates behavioral economics, reference-dependent utility theory, and mental accounting frameworks to explain observed patterns. The study was conducted in the United Kingdom during the 2021-2024 inflationary episode, when UK CPI peaked at 11.1% in October 2022. Quantitative findings reveal that perceived inflation is significantly and positively associated with price sensitivity (β = .41, p < .001), while simultaneously associated with lower hedonic and utilitarian value perceptions, with hedonic value experiencing a larger proportional decline. Structural equation modelling identifies income certainty and product category involvement as significant moderators of these relationships. Qualitative thematic analysis surfaces five dominant adaptation strategies employed by consumers: systematic downtrading, strategic stockpiling, brand repertoire expansion, quality-threshold anchoring, and discretionary expenditure suspension. Triangulation of quantitative and qualitative data reveals that consumers construct layered cognitive frameworks distinguishing between “price fairness” and “value for money,” and that these constructs diverge substantially under high inflationary conditions. The findings extend prospect theory and mental accounting models into macroeconomic contexts, offering actionable insights for pricing strategy, retail management, and consumer welfare policy. Implications for marketers, policymakers, and future research directions are discussed.
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