Eurozone inflation expectations ease, growth outlook improves: ECB

Meanwhile, median expectations for inflation over the next 12 months decreased by 0.2 percentage points (pp) to 2.6 per cent, meaning that the increases observed in March and April were fully reversed in May and June.

Expectations for three years ahead were unchanged at 2.4 per cent, while expectations for inflation five years ahead held steady at 2.1 per cent for the seventh consecutive month, as per ECB Consumer Expectations Survey (CES) results – June 2025.

Uncertainty about inflation expectations over the next 12 months was unchanged in June. Broadly, the evolution of inflation perceptions and expectations followed similar trends across income groups. However, over the previous year and a half lower income quintile reported slightly higher inflation perceptions and short-horizon expectations than higher income quintiles.

Younger respondents (aged 18-34) continued to report lower inflation perceptions and expectations than older respondents (aged 35-54 and 55-70), although the gap was narrower than in previous years.

Consumers’ expectations for nominal income growth over the next 12 months remained unchanged at 1 per cent in June. However, this apparent stability conceals a decline in expectations among higher income individuals, offset by an increase in expectations among lower income groups. Perceived nominal spending growth over the previous 12 months held steady at 5 per cent in June.

In contrast, expected nominal spending growth over the next 12 months decreased further to 3.2 per cent in June, from 3.5 per cent in May and 3.7 per cent in April. This decline reflects the heightened economic uncertainty of recent months as well as lower expected inflation.

Economic growth expectations for the next 12 months became less negative, rising to -1 per cent in June from -1.1 per cent in May and -1.9 per cent in April.

Expectations for the unemployment rate 12 months ahead edged down to 10.3 per cent in June, from 10.4 per cent in May. Consumers continued to expect that the future unemployment rate would be only slightly higher than the perceived current unemployment rate (9.8 per cent), suggesting a broadly stable labour market outlook, added the CES survey.

ALCHEMPro News Desk (SG)