ECB: Long- and Medium-Term Consumer Inflation Expectations Post Decline
7 March 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – According to the European Central Bank’s Consumer Expectations Survey results for January 2023, released on Tuesday, Eurozone citizens’ perceptions of inflation have declined across multiple time horizons.
The survey results showed that consumers’ median rate of perceived inflation over the past 12 months declined to 9.5%, down from 9.9% in December 2022. Meanwhile, expectations for inflation three years ahead declined by a considerable margin, from 3.0% to 2.5%, substantially more than reversing a slight increase in the previous survey. Expectations for inflation over the next 12 months also fell, to 4.9% from 5.0%.
Consumer expectations for growth and unemployment improved somewhat, the survey showed. Despite still indicating a contraction, consumers revised upwards their projections for economic growth within the next year to -1.2% as opposed to -1.5% in December 2022. Correspondingly, expectations for the unemployment rate decreased to 11.6% for the next 12 months, compared to the previous forecast of 11.9% in December.
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 1.3% in December, an increase from 1.0% in November. This improvement was primarily driven by respondents with household incomes below the median, the ECB said.
House price growth expectations weakened as well, according to the survey, with consumers expecting an increase of 2.5% in the price of their home over the next 12 months, compared with 3.0% in December 2022.
Expectations for mortgage interest rates 12 months ahead remained broadly stable at 4.9%, which was 1.6 percentage points higher than at the beginning of 2022, the ECB said.