ECB: Consumer Expectations of Inflation Unchanged at Lowest Level Since 2021

26 July 2024

By Isabel Teles – FRANKFURT (Econostream) – The European Central Bank’s latest consumer expectations survey, released Friday, showed that consumer expectations of future inflation remained at the same level in June as in May, when the lowest levels in almost three years had been hit.

‘[M]edian expectations for inflation over the next 12 months remained unchanged at 2.8%, after having fallen in May to their lowest level since September 2021. Median expectations for inflation three years ahead were also unchanged in June, at 2.3%’, the ECB reported.

The uncertainty about inflation expectations one year ahead remained unchanged at the lowest level since February 2022, the survey showed.

Perceived inflation over the past 12 months declined noticeably, from 4.9% in May to 4.5% in June, according to the survey.

Nominal income growth expectations increased from 1.2% in May to 1.4% in June, while the expectations for nominal spending growth remained stable at 3.3%, the survey found.

According to the survey, over the past 12 months, perceptions of nominal spending growth decreased from 5.9% in May to 5.8% in June.

Expectations for the unemployment rate one year ahead decreased to the lowest level since the start of the series, falling from 10.7% in May to 10.6% in June, the survey showed.

‘Consumers continued to expect the future unemployment rate to be only slightly higher than the perceived current unemployment rate (10.3%), implying a broadly stable labour market’, the ECB said.

On the other hand, economic growth expectations for the next 12 months turned more negative in June, at -0.9%, compared to -0.8% in May, the survey noted.

The survey reported that consumer expectations of home price increases one year ahead picked up slightly in June (2.7% vs 2.6% in May), while expectations of mortgage interest rates fell from 4.9% in May to 4.8% in June.

‘The net percentage of households reporting a tightening (relative to those reporting an easing) in the access to credit over the previous 12 months declined further, while the net percentage of those expecting a tightening over the next 12 months remained unchanged from May’, the ECB said.