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ECB survey shows inflation expectations ease, unemployment outlook worsens
Consumers’ median next-12-month inflation expectations fell to 3.5% while the unemployment rate they expect 12 months ahead rose to 11.3%.
The ECB’s Consumer Expectations Survey for May 2026 showed median perceived inflation over the prior 12 months stayed flat at 4.0%, while households’ median expectations for inflation over the next 12 months declined to 3.5% from 4.0% in April, according to the ECB.
Looking further out, inflation expectations for three years ahead remained unchanged at 2.9% and five years ahead held at 2.4%. The survey also found that uncertainty around the next-12-month inflation outlook decreased, though it remained higher than it was before the start of the war in the Middle East.
ECB data indicated that nominal income growth expectations increased to 1.0% from 0.8% in April, while perceived nominal spending growth over the previous 12 months rose to 5.4% from 5.3%. At the same time, expected nominal spending growth over the next 12 months fell to 3.8% from 4.3%.
Economic growth expectations for the next 12 months improved to -1.7% from -2.2% in April, but households’ expected unemployment rate 12 months ahead increased to 11.3% from 11.2%. The survey also reported home price growth expectations rose slightly to 3.6% from 3.7% and mortgage interest rate expectations stayed at 4.9%.