ECB: Consumer Inflation Expectations Fall Again
5 July 2023
By Xavier D’Arcy – FRANKFURT (Econostream) – Eurozone citizens’ inflation expectations continued to decline in May 2023, according to the European Central Bank’s Consumer Expectations Survey results released on Wednesday.
The survey results showed that expectations for inflation over the next 12 months decreased to 3.9% in May from 4.1% in April. Consumers’ median rate of perceived inflation over the past 12 months also declined to 8.0%, after 8.9% in April. Meanwhile, expectations for inflation three years ahead remained steady at 2.5%.
Uncertainty about inflation expectations fell to its lowest level since March 2022, although it remained above levels observed prior to this, the ECB said.
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 -0.7% as opposed to -0.8% in April. Correspondingly, expectations for the unemployment rate decreased to 11.0% for the next 12 months, compared to the previous forecast of 11.2% in April.
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 1.2%, an increase from 1.1% in April. 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 2.1% in the price of their home over the next 12 months, compared with 2.2% in April. These results were the lowest value reported in the past two years.