Despite recent easing in price pressures, short-term consumer inflation expectations rose notably in the European Central Bank’s (ECB) latest survey.
The central bank reported that its latest monthly online survey found that median expectations for inflation for the next 12 months came in at 4.0%, up from 3.5% in the previous survey.
At the same time, uncertainty about the trajectory for inflation over the coming year also increased, the ECB noted.
While the short-term outlook has shifted, median consumer inflation expectations for the next three years remained unchanged at 2.5%.
The ECB also reported that while expectations for nominal income growth over the next 12 months remained unchanged at 1.2%, spending expectations rose slightly. Spending is expected to rise by 3.4% over the period.
The economic outlook was also a bit gloomier, with growth expectations turning more negative. Consumers now expect output to contract by 1.2% in the coming year, down from 0.8% in the previous survey. Expectations for unemployment rose to 11.4% from 11.1%.