FRANKFURT (Reuters) – Consumer one-year inflation expectations in the euro zone were revised down again in May, a new survey released by the European Central Bank (ECB) showed on Wednesday.
However, consumers are seeing the rise in long-term prices come down less quickly than the ECB would like.
The survey also shows modest expectations for income growth, which should provide relief to officials at the ECB, which is engaged in a struggle with repeated interest rate hikes to rein in persistent inflation in the 20 countries sharing the euro.
Eurozone consumers’ median 12-month higher inflation expectations fell from 4.1% in April to 3.9% in May, its lowest level since March 2022, just after the start of the war in Ukraine. This median was still at 5.0% in the March survey.
Consumer inflation expectations in three years remained unchanged at 2.5%, but this figure is still above the ECB’s 2% target.
On nominal income growth, expected at 1.2%, consumers in the bloc expect it to lag inflation over the next 12 months, as spending is expected to rise by 6, 8%.
This should translate into lower savings or higher borrowing, which should alleviate fears of a possible wage/price spiral.
(Report Francesco Canepa; French version Claude Chendjou, edited by Kate Entringer)
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