Households’ short-term inflation expectations eased slightly in September, but long-term expectations remain unchanged, according to the European Central Bank’s (ECB) latest consumer survey.
Median inflation expectations for the next 12 months dipped to 2.7% in the ECB’s latest monthly survey, down from 2.8% in August. Yet, long-term forecasts remained unchanged, with three-year inflation expected to be 2.5%, and the five-year rate forecast at 2.2%.
“Respondents in lower income quintiles continued to report on average slightly higher inflation perceptions and short-horizon expectations than those in higher income quintiles,” the ECB said, noting that this trend has been observed since 2023.
Additionally, younger respondents (aged 18-34) had lower inflation expectations than older respondents, it added.
The survey also found that consumers’ nominal income growth expectations for the next 12 months remained at 1.1% in September, which was unchanged from August — but anticipated spending growth rose to 3.5% last month, up from 3.3% in August.
The ECB reported that respondents in the three lower income quintiles have slightly higher spending growth expectations than households in the top two quintiles.
Additionally, economic growth expectations for the next 12 months remained stable at -1.2%, it said — as did expectations for the unemployment rate, which remained at 10.7%.