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Euro-area households raise one-year inflation expectations to 3.1 per cent

Euro-area consumers raised their median inflation expectation for the coming year to 3.1 per cent in September, while three-year and five-year expectations were unchanged. The European Central Bank’s survey also showed a weaker growth outlook and higher expected unemployment. Households anticipated slightly faster income and spending growth, alongside tighter access to credit.

Economics & Markets··Morning
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One-year expectations edge up

Consumers in the euro area raised their median expectation for inflation over the coming year to 3.1 per cent in September, from 3 per cent in August. The European Central Bank’s Consumer Expectations Survey, published on 23 October, showed no change in longer horizons: three-year expectations remained at 2.9 per cent and five-year expectations at 2.5 per cent.[1], [2]

Perceived inflation over the preceding 12 months rose from 3.5 per cent to 3.6 per cent. Lower-income households expected higher inflation, while respondents aged 18–34 reported lower expectations than older age groups. The figures describe households’ views rather than the central bank staff’s forecasts.[1]

Growth and employment outlooks weaken

Mean expected economic growth over the next year deteriorated from minus 1.2 per cent to minus 1.5 per cent. Expected unemployment rose from 11 per cent to 11.3 per cent. Income expectations nevertheless improved slightly: nominal household income was expected to grow 1.1 per cent, against 1 per cent previously. Expected spending growth increased from 3.6 per cent to 3.7 per cent.[1]

Credit access tightens as housing expectations rise

Consumers expected house prices to rise 3.5 per cent over the coming year, up from 3.4 per cent. Expected mortgage rates held at 4.9 per cent. Assessments of past and future credit access showed greater net tightening. The survey covered adults in 11 euro-area countries, with fieldwork between 27 August and 28 September.[1]

References

  1. News sourceEuropean Central BankEuro-area one-year inflation expectations rise to 3.1%↩1↩2↩3↩4
  2. News sourceReutersEuro-area consumers raise next-year inflation expectations↩
Central banks and the rate cycleEnergy transition and climate

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