ECB Survey Shows Eurozone Consumer Inflation Expectations Rose Significantly
Eurozone consumers expect inflation in a year to be higher than expected a month ago, and their growth and inflation expectations worsened, results of a survey by the European Central Bank showed Thursday.
Median rate of expected inflation in the next 12 months climbed to 5.0 percent from 4.6 percent in February, the March edition of the ECB Consumer Expectations Survey revealed.
One-year ahead inflation expectation was 4.9 percent in January.
Expectations for inflation three years ahead also increased, rising to 2.9 percent from 2.4 percent.
“Uncertainty about inflation expectations 12 months ahead reached its highest level since the start of the survey in April 2020,” the ECB said.
Consumers expected their nominal income growth in one year at 1.3 percent versus 1.2 percent in February.
Spending during the 12-month period is now expected to grow by 4.1 percent, which is stronger than the 3.9 percent seen in February.
However, consumers’ growth expectations for the next 12 months weakened to -1.0 percent from -0.9 percent in the previous month.
Their fear of unemployment also increased slightly in March. Expectations for the jobless rate in the next 12 months rose to 11.7 percent from 11.5 percent in February.
Consumers continued to expect the future unemployment rate to be higher than the perceived current unemployment rate of 11.3 percent and the lowest income group reported the highest expected and perceived unemployment rates, the ECB said.
Euro area consumers expected the house price over the next 12 months to rise 2.7 percent, which was somewhat higher than in previous months.
That said, home price growth expectations remained well below those recorded in the first half of 2022, the ECB said.
Consumers expected their access to credit over the next 12 months to be tighter compared with February.
That is in line with the ECB bank lending survey results released last week that showed banks in the Eurozone substantially tightened credit standards for loans to businesses and house mortgages in the first quarter and plan to continue doing so in the three months to June.
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