Eurozone consumers revised down near-term inflation forecasts while keeping long-term views steady, the ECB’s May survey revealed.
Eurozone consumers lowered their median inflation expectations for the next 12 months to 3.5% in May, down from 4.0% in April, according to the ECB’s Consumer Expectations Survey. Perceptions of past inflation remained unchanged at 4.0%, while three- and five-year inflation expectations held steady at 2.9% and 2.4%, respectively.
The survey also showed improved economic growth expectations, though they remained negative, and a slight uptick in expected unemployment. Nominal income growth expectations rose, while spending growth forecasts declined. Housing price growth expectations softened, though mortgage rate expectations were unchanged.
Uncertainty around near-term inflation expectations eased but stayed elevated compared to pre-Middle East war levels. Lower-income and younger respondents continued to report higher inflation perceptions and expectations than other groups.