Inflation expectations among European households have declined, but economic growth expectations remain unchanged, according to the latest consumer survey by the European Central Bank (ECB).
The latest edition of the ECB’s monthly consumer survey found that the median rate of perceived inflation over the past 12 months declined in September, and expectations for inflation over the next 12 months also dropped, with households expecting inflation of 2.4% in the coming year, down from expectations of 2.7% in August.
Amid receding inflation worries, households’ expectations for income growth edged higher, to 1.3% from 1.2% in the previous survey. This rise in income expectations was driven by the lower 40% of households, the ECB noted.
While households expect weaker inflation and slightly higher income growth, their expectations for consumer spending remained unchanged, with nominal spending expected to rise by 3.2% in the year ahead.
“For the first time since March 2023, there was no drop in either perceptions or expectations of nominal spending, while inflation perceptions and expectations both continued on their downward trajectory, which might indicate a positive turning point for real spending,” the ECB said.
Yet, households’ economic growth expectations for the next 12 months remained negative at -0.9%, which was unchanged from the previous survey. Further, expectations for the jobless rate climbed slightly to 10.6% from 10.4%.