Euro Area inflation expectations rise, spending growth outlook softens

Inflation expectations for the next year rose by 0.3 percentage points to 2.9 per cent, while three-year expectations edged up by 0.1 percentage points to 2.5 per cent, ECB said in a release.

For the first time, the ECB reported five-year inflation expectations separately, which remained steady at 2.1 per cent. Inflation expectations at all horizons remained below perceived past inflation rates. Notably, younger consumers aged 18–34 continued to report lower inflation perceptions compared with older groups.

Nominal income growth expectations over the next 12 months stayed at 1.0 per cent, while perceived nominal spending growth over the previous 12 months rose slightly to 5.0 per cent. However, expected spending growth for the year ahead fell to 3.4 per cent, marking a second consecutive monthly decline.

Economic sentiment remained cautious, with growth expectations stable at -1.2 per cent for the next 12 months. Unemployment rate expectations decreased slightly to 10.4 per cent, indicating a broadly stable labour market.

ALCHEMPro News Desk (HU)