Europe's perceived inflation over last 12 months at 9.9%: ECB

Median expectations for inflation over the next 12 months decreased from 5.4 per cent to 5.0 per cent, while expectations for inflation three years ahead edged down from 3.0 per cent to 2.9 per cent, according to a press release by the ECB.

Uncertainty about inflation expectations 12 months ahead has been stable since July, although it remains well above the level prevailing before the war in Ukraine. Inflation perceptions and expectations were closely aligned across income groups, but younger respondents (aged 18-34) continued to report lower inflation perceptions and expectations than older respondents (aged 55-70).

Consumers expected their nominal income to grow by 0.9 per cent over the next 12 months, up from 0.7 per cent in October. For the first time since mid-2021, expectations for nominal spending growth over the next 12 months decreased—from 4.7 per cent to 4.3 per cent. Perceptions of nominal spending growth over the previous 12 months remained unchanged at 6.3 per cent. Expectations for nominal spending remained broadly aligned across income groups, with younger respondents (aged 18-34) again reporting lower expectations for nominal spending than older respondents.

Economic growth expectations for the next 12 months increased from -2.6 per cent in October to -2.0 per cent. Consistent with the higher expectations for economic growth, expectations for the unemployment rate 12 months ahead edged down to 12.4 per cent, compared with 12.5 per cent in October. Consumers continued to expect the future unemployment rate to be higher than the perceived current unemployment rate (11.8 per cent). Both the expected and the perceived unemployment rates were highest for the lowest income quintile.

ALCHEMPro News Desk (NB)