ECB: Consumers expect limited rise in inflation

According to the European Central Bank (ECB) Consumer Expectations Survey, consumers’ inflation expectations for the next 12 months increased from 3.4 percent to 3.5 percent.

The ECB announced the results of the August Consumer Expectations Survey.

Consequently, the 12-month average inflation expectation of consumers in the eurozone increased from 3.4 percent to 3.5 percent in August, and the inflation expectation for the next 3 years increased from 2.4 percent at 2.5 percent.

While the region’s consumer economic growth expectations decreased slightly compared to the previous month, consumers’ economic growth expectations for the next 12 months, which were -0.7 percent in July, decreased to -0.8 percent in August.

UNEMPLOYMENT EXPECTATIONS INCREASED

While consumers expect unemployment to be 11.1 percent on average over the next 12 months, this rate was predicted to be 11 percent in July.

Consumers who expected house prices to rise 2.3 percent over the next 12 months predicted an increase for the first time since March, while in July the expectation was for a 2.1 percent increase.

While the ECB targets 2 percent inflation in the medium term, the bank’s Consumer Expectations Survey is published monthly.

The survey is carried out by interviewing approximately 14 thousand people from Germany, France, Italy, Spain, the Netherlands and Belgium, which represent approximately 85 percent of the eurozone’s GDP.

Inflation expectations play an important role in the ECB’s monetary policy. How far and at what pace the ECB will go in terms of interest rate hikes will determine the outlook for inflation.

It should be noted that the ECB took the fastest tightening step in history by raising interest rates by a total of 450 basis points from July 2022, despite the expectation of a recession in the economy.

On the other hand, according to data from the European Statistical Office (Eurostat), annual inflation in the euro area, which was 5.3 percent in July, stood at 5.2 percent in August. (AA)