ECB: Consumers’ Perception of Past Inflation Rose in August; Expectations of Future Inflation Unchanged

7 October 2022

By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s consumer expectations survey, released Friday for the second time, showed an increase in August in the perception of past inflation, but expectations of future inflation held steady at July’s level.

‘Perceived inflation over the previous 12 months continued to increase, with the median rate now standing at 8.0%, up from 7.9% in July’, the ECB said.

‘Inflation expectations remained well below the perceived past inflation rate, particularly at the medium-term horizon of three years’, it continued. ‘Both the median expectation for inflation over the next 12 months and the median expectation for inflation three years ahead remained unchanged at 5.0% and 3.0%, respectively.’

The survey, based on some 14,000 responses from Belgium, Germany, Spain, France, Italy and the Netherlands, also showed overall expectations for nominal income growth 12 months ahead at 1.0% (up from 0.8% in July), with the exception of those in the lowest income quintile, who anticipated lower nominal income growth

‘Expectations for nominal spending growth over the next 12 months rose further to reach 4.5%, up from 4.2% in July, owing to the increases anticipated by lower- and middle-income respondents’, the ECB reported.

Expectations of economic growth over the next 12 months improved from -1.9% in July to -1.7% in August, with expectations for unemployment 12 months ahead standing at 11.9% in August after 12% in July.