ECB: Consumers expect inflation to drop

The European Central Bank (ECB) announced the results of its May Consumer Expectations Survey. Consequently, the average inflation expectation of consumers in the Eurozone over 12 months decreased from 4.1 percent to 3.9 percent. Thus, consumer expectations about Eurozone inflation fell to the lowest level since March 2022 in May.

Consumer inflation expectations for the next 3 years remained constant at 2.5 percent. The ECB is targeting 2 percent inflation over the medium term.

It is noteworthy that the economic growth expectations of consumers in the region are more optimistic compared to the previous month, and the expectation of economic growth of consumers for the next 12 months, which was minus 0.8 percent in April, increased to minus 0.7 percent. In May.

Consumers expect unemployment to average 11 percent over the next 12 months. This rate was forecast as 11.2 percent in April.

IT IS CARRIED OUT BY INTERVIEWING 14 THOUSAND PEOPLE

The ECB Consumer Expectations Survey is published monthly. The survey is carried out by interviewing some 14,000 people from Germany, France, Italy, Spain, the Netherlands and Belgium, which account for around 85 percent of the euro zone’s GDP.

Inflation expectations play an important role in the ECB’s monetary policy. How far and how fast the ECB will go in raising interest rates will determine the inflation outlook.

Notably, the ECB took the fastest tightening step by raising interest rates by a total of 400 basis points from July 2022, despite expectations of a recession in the economy.

On the other hand, according to data from the European Statistical Office (Eurostat), annual inflation in the Euro Zone, which was 6.1 percent in May, was 5.5 percent in June. (AA)