ECB: Consumer Inflation Expectations Stable for Next 12 Months, Slightly Higher for Next Three Years

5 September 2023

By Mariana Somensi – NICOSIA (Econostream) - The European Central Bank’s consumer expectation survey, released on Tuesday, showed median consumer inflation expectations for the next 12 months unchanged in July, while those for the next three years increased slightly.

Median expectations for inflation for the previous 12 months remained unchanged at 8% for the third consecutive month (8.9% in April), while expectations for the next 12 months stayed at 3.4% for the second time after recording 3.9% in May and 4.1% in April.

Median expectations for inflation three years ahead slightly increased to 2.4%, from 2.3% in June (2.5% in May and April).

The survey, based on some 14,000 adult consumers aged 18 or over from Belgium, Germany, Spain, France, Italy and the Netherlands, showed nominal income expected to increase by 1.1% over the next 12 months, slightly below June’s 1.2%.

Nominal spending growth expectations over the next 12 months remained unchanged at 3.4%, the lowest since March of last year.

‘Economic growth expectations for the next 12 months were slightly more negative, standing at -0.7%, compared with -0.6% in June’, the ECB reported. ‘Expectations for the unemployment rate 12 months ahead were unchanged at 11.0%. Consumers continued to expect the future unemployment rate to be only slightly higher than the perceived current unemployment rate (10.8%), implying a broadly stable labour market.’

‘Consumers expected the price of their home to increase by 2.1% over the next 12 months, unchanged since May 2023’, the ECB said.

Meanwhile, expectations for mortgage interest rates 12 months ahead increased to 5.1% from 5.0%.

‘The share of consumers who reported having applied for credit during the past three months, which is surveyed on a quarterly basis, increased to 14.8% in July, from 13.4% in April, which was the highest value since October 2020’, the ECB said.