European Central Bank says Inflation Expectations Among Consumers Remain Unchanged in in Euro Area

Consumers in the euro area expect that inflation will remain unchanged for the next 12 months, according to a survey released by the European Central Bank (ECB).

The median expectation for the three years ahead also remains unchanged, the survey released on Friday said, but consumers expect slight economic growth, as well as increases in nominal income and spending.

The central bank’s consumer expectations survey, a monthly survey of around 14,000 adults from six euro area countries, showed that inflation expectations in August for the next 12 months and three years ahead remained unchanged at 5.0 per cent and 3.0 per cent, respectively, reports Xinhua news agency.

The ECB is targeting an inflation rate of 2 per cent over the medium term.

Consumers estimate that their nominal income will grow by 1.0 per cent over the next 12 months, up from 0.8 per cent in July.

However, they expect a faster increase in expenses, of 4.5 per cent for the next 12 months, up from 4.2 per cent in July. This is due to the increases anticipated by lower- and middle-income respondents.

“Economic growth expectations for the next 12 months increased slightly from -1.9 per cent in July to -1.7 per cent”, said the ECB.

Meanwhile, forecasts for the unemployment rate 12 months from now were marginally lower at 11.9 per cent, which was in line with the stronger expectations for economic growth.

Consumer estimates for the increase in the price of their homes over the coming year have slightly lifted, to 3.4 per cent, while predictions for mortgage interest rates have been raised further to 4.4 per cent, the bank added.