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Consumers’ inflation expectations and income growth hopes are declining, while their economic outlook remains negative, the European Central Bank (ECB) reported on Friday.

The central bank’s monthly online survey of consumers for January found that median inflation expectations for the next 12 months eased to 2.6% from 2.8% in the previous survey — and expectations for the coming three years remained unchanged at 2.4%. 

At the same time, consumers reported that they perceived inflation over the past 12 months at 3.4%, meaning that future inflation expectations remain below the perceived rate from the past year. 

The ECB also reported that uncertainty about inflation expectations for the next 12 months remained unchanged at its lowest level since February 2022. 

While inflation expectations eased, so did consumers’ income growth expectations for the coming year. Respondents said they expected incomes to grow by 0.9% in the next 12 months, which is down from the previous survey’s 1.1% expectation. 

“The drop in income growth expectations was mainly driven by the lowest income quintile, while the income growth expectations of the two highest quintiles remained unchanged,” the ECB noted. 

Consumer spending was also expected to rise by 3.6% over the next 12 months, up slightly from 3.5% in the past survey.

Against this backdrop, consumers were still anticipating negative economic growth in the year ahead, with growth expectations over the next 12 months coming in at -1.1%, up slightly from the previous survey’s -1.3% reading. 

The survey also found that the unemployment rate in the next 12 months was expected to reach 10.4%, up slightly from the perceived current rate of 9.9%, “implying a broadly stable labour market,” the ECB said.

The monthly survey canvasses 19,000 adults across 11 European countries.