ECB Says Consumer Inflation Expectations Increased Significantly in March

11 May 2023

By Xavier D’Arcy – FRANKFURT (Econostream) – According to the European Central Bank’s latest Consumer Expectations Survey results, released on Thursday, euro area citizens’ perceptions of inflation climbed substantially in March.

The survey results showed that ‘consumer inflation expectations increased significantly’, the ECB said. Consumers’ median rate of perceived inflation over the past 12 months increased to 9.9% in March from 8.7% in February. Meanwhile, median expectations for inflation over the next 12 months increased, moving from 4.6% in February to 5.0%.

Both of these measures of inflation expectations had fallen continuously since peaking in October 2022. March’s survey results were the first rise in these indicators in five months.

Expectations for inflation three years ahead also rose, from 2.4% to 2.9%. On the whole, expectations ‘remained well below the perceived past inflation rate, particularly at the three years horizon’, the ECB commented.

Consumer expectations for growth and unemployment deteriorated, the survey showed. Consumers revised downwards their projections for economic growth within the next year to -1.0% as opposed to -0.9% in February. Correspondingly, expectations for the unemployment rate decreased to 11.7% for the next 12 months, compared to the previous forecast of 11.5% in February.

The survey, based on some 14,000 responses from Belgium, Germany, Spain, France, Italy and the Netherlands, showed overall expectations for nominal income growth 12 months ahead at 1.3% in March, up from 1.2% in February. Expected nominal income growth declined for older consumers (aged 55 and above), while it increased for younger consumers (aged 18-34), the ECB said.