By Marta Vilar – MADRID (Econostream) – Eurozone consumers’ short-term inflation expectations fell markedly in May, while their assessment of inflation for three and five years ahead remained unchanged, the European Central Bank said on Friday.
The ECB’s Consumer Expectations Survey showed median inflation expectations for the next 12 months, declining to 3.5% from 4.0% in April, while perceived inflation over the previous 12 months remained unchanged at 4.0%.
Inflation expectations three years ahead remained unchanged at 2.9%, while expectations five years ahead were also unchanged at 2.4%, the ECB said.
Uncertainty about inflation expectations over the next 12 months declined but remained above levels seen before the start of the war in the Middle East, according to the survey.
The survey pointed to an improvement in households’ income expectations. Consumers’ expectations for nominal income growth over the next 12 months picked up to 1.0% from 0.8% in April, while expected nominal spending growth declined to 3.8% from 4.3%.
Perceived spending growth over the previous 12 months edged up to 5.4% from 5.3%, the ECB said.
Consumers’ expectations for economic growth over the next 12 months became less negative, improving to -1.7% from -2.2%.
The expected unemployment rate 12 months ahead increased to 11.3% from 11.2%, while consumers continued to expect the future unemployment rate to be slightly above the perceived current rate of 10.7%, suggesting a broadly stable labor market outlook.
Housing expectations changed little. Consumers expected home prices to rise 3.6% over the next 12 months, down from 3.7% in April, while expected mortgage rates remained unchanged at 4.9%.
The net share of households reporting tighter access to credit over the previous 12 months rose further, reaching its highest level since February 2024, the ECB said.
The net share expecting tighter credit conditions over the next 12 months declined, however.
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