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Eurozone consumers keep inflation expectations near prior levels
ECB data showed next year inflation expectations edged up to 3.0% in August, while three year and five year outlooks rose to 2.9% and 2.5%.
The European Central Bank said its August Consumer Expectations Survey found the median rate of perceived inflation over the previous 12 months held steady at 3.5% compared with July.
ECB survey results also showed median expectations for inflation rose across multiple horizons, with expectations for the next 12 months increasing to 3.0% from 2.9%, the three year outlook climbing to 2.9% from 2.7%, and the five year measure rising to 2.5% from 2.4%.
The ECB noted uncertainty about next 12 month inflation expectations fell in August, but remained above levels seen before the start of the conflict in the Middle East. The survey also highlighted gaps by income, with respondents in the bottom income quintile reporting higher inflation perceptions and expectations than those in the top quintile, and younger respondents (aged 18 to 34) reporting lower figures than older groups.
Beyond inflation, consumers’ nominal income growth expectations over the next 12 months were unchanged at 1.0%, economic growth expectations stayed at -1.2%, and unemployment expectations for 12 months ahead decreased to 11.0% from 11.2%. The ECB added that households expected home prices to rise by 3.4% over the next 12 months, and mortgage interest rates in 12 months’ time to be 4.9%, both unchanged from the prior month.