ECB: Consumer Expectations of Future Inflation Lowest Since Early 2022

16 January 2024

By Isabel Teles – FRANKFURT (Econostream) – The European Central Bank’s consumer expectations survey, released Tuesday, showed November medium expectations of future inflation down to the lowest level since early 2022.

For the next 12 months, expectations according to the survey declined from 4% in October to 3.2%; for three years ahead, the decrease was from 2.5% in October to 2.2%.

‘Inflation expectations, both at the one-year and three-year horizons, declined to their lowest levels since February 2022, well below the perceived past inflation rate. Uncertainty about inflation expectations over the next 12 months declined slightly’, the ECB reported.

Perceived inflation over the past 12 months also decreased significantly, from 7.8% in October to 7% in November, the report said.

The survey, based on some 14,000 responses from Belgium, Germany, Spain, France, Italy and the Netherlands, showed overall expectations for nominal income increase over the next 12 months grew from 1.1% in October to 1.2% in November.

While perceptions of nominal spending growth over the past 12 months remained stable at 6.3%, the perception over the next 12 months registered a second slight decrease, from 3.4% in September to 3.3% in October and to 3.2% in November, according to the report.

In November, economic growth expectations for the next 12 months became marginally less negative, reaching -1.2%, against -1.3% in October, the report said.

The survey showed that expectations for the unemployment rate 12 months ahead fell from 11.4% to 11.1%.

‘Consumers continued to expect the future unemployment rate to be only slightly higher than the perceived current unemployment rate (10.7%), implying a broadly stable labour market’, the ECB said. ‘The lowest income quintile continued to report the highest expected and perceived unemployment rates.’

According to the report, expectations of home price increases for the next 12 months grew slightly from 2% in October to 2.1% in November, whereas expectations for mortgage interest rates 12 months ahead fell slightly to 5.3% in November after reaching 5.4% in October, the highest level ever registered.

‘Perceived access to credit over the previous 12 months had eased slightly from its peak in October, and access to credit was expected to become slightly easier over the next 12 months also from the October peak’, the ECB said.