Euro Area Inflation Expectations Hit Lowest Since 2021: ECB Survey

Economic

Summary:

Inflation expectations in the euro area have dropped to their lowest since September 2021, according to the ECB's April 2024 survey.

Inflation expectations across the euro area have declined to their lowest since September 2021, according to the April 2024 European Central Bank (ECB) Consumer Expectations Survey. The survey reported that the median inflation expectation for the coming 12 months edged down to 2.9 per cent from 3 per cent in March, while expectations for three years ahead also decreased slightly to 2.4 per cent from 2.5 per cent.

Despite these reductions, the median rate of perceived inflation over the past 12 months remained unchanged at 5 per cent. This suggests that while inflation expectations are softening, they still lag behind the levels of perceived past inflation, which may influence consumer sentiment and spending behaviours, as per the survey.

The survey also highlighted stability in income and consumption expectations, with consumer expectations for nominal income growth holding steady at 1.3 per cent. However, perceptions of nominal spending growth over the previous 12 months slightly decreased to 6.3 per cent from 6.4 per cent, a decline observed mainly among older respondents aged 35-70. Expectations for nominal spending growth over the next year remained stable at 3.6 per cent.

On the labour market front, the outlook appears cautiously optimistic. Economic growth expectations for the next 12 months were less negative, improving to minus 0.8 per cent from minus 1.1 per cent in March. However, expectations for the unemployment rate over the next 12 months rose slightly to 10.9 per cent from 10.7 per cent, suggesting a broadly stable yet cautious labour market scenario. Notably, the probability of finding a job decreased among unemployed respondents, while the probability of job loss increased among employed individuals.

The survey also observed that inflation perceptions and expectations were relatively aligned across different income groups, with slightly lower expectations among the highest income quintile. Younger respondents (aged 18-34) reported lower inflation expectations compared to older age groups, though there was a noted convergence in inflation perceptions across all ages.

Source：fibre2fashion

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Euro Area Inflation Expectations Hit Lowest Since 2021: ECB Survey

Source：fibre2fashion

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