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ECB survey shows euro-area inflation expectations easing in July

Median inflation expectations for the next 12 months fell to 2.9% and unemployment expectations stayed at 11.2%, alongside a mixed read on labor-market sentiment.

Reported · Written up by our desk · Central Banks

The European Central Bank reported that euro-area consumers’ perceived inflation over the previous 12 months eased in July, with the median rate dropping to 3.5% from 3.6% in June. Expectations for inflation over the next 12 months also declined to 2.9% from 3.0%, and median expectations three years ahead fell to 2.7% from 2.8%.

Looking further out, median inflation expectations five years ahead were unchanged at 2.4%. The ECB said uncertainty about next-12-month inflation stayed elevated versus the period before the start of the war in the Middle East.

The survey showed consumers’ nominal income expectations over the next 12 months decreased to 1.0% from 1.1%, while perceived nominal spending growth over the previous 12 months remained at 5.1%. Expected nominal spending growth over the next 12 months was unchanged at 3.6%, with lower-income quintiles expecting slightly higher spending growth than higher-income quintiles.

On jobs, expectations for the unemployment rate 12 months ahead were unchanged at 11.2%, and consumers expected the future unemployment rate to be only slightly higher than the perceived current rate of 10.6%. The ECB also cited quarterly data pointing to weakening labor-market sentiment, with the expected probability of finding a job falling to 30.8% in July from 32.1% in April, and the expected probability of job loss rising to 9.8% from 8.8%.

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