European Central Bank survey shows consumer inflation expectations decreased in January

Investing.com - According to the consumer expectations survey released by the European Central Bank on Friday, consumer inflation expectations in the Eurozone decreased in January.

The median inflation expectation for the next 12 months fell from 2.8% in December to 2.6% in January, a decrease of 0.2 percentage points. The median perceived inflation rate over the past 12 months also declined from 3.2% last month to 3.0%.

Inflation expectations for the next three years remain steady at 2.6%, while the five-year inflation expectation has decreased from 2.4% to 2.3%. Uncertainty around the inflation expectation for the next 12 months remained unchanged in January.

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Respondents in the lowest income quintile continue to report slightly higher average perceived inflation and short-term expectations compared to those in the highest income quintile, a trend that has persisted since 2023.

Overall, inflation perceptions and expectations across different income groups remain highly aligned. Young respondents aged 18-34 continue to report lower inflation perceptions and expectations than older groups aged 35-54 and 55-70.

Consumers’ expectations for nominal income growth over the next 12 months increased from 1.1% in December to 1.2% in January. This increase was driven by the top three income quintiles. Perceived nominal expenditure growth over the past 12 months remained steady at 4.9% in December.

Expected nominal expenditure growth over the next 12 months also remained at 3.4% in January.

The economic growth outlook for the next 12 months stayed at -1.1% in January. The unemployment rate expectation for the next 12 months remained at 11.0%.

Low-income households expect the highest unemployment rate in the next 12 months at 13.5%, while high-income households expect the lowest at 9.5%. Consumers continue to expect the future unemployment rate to be slightly higher than the current perceived unemployment rate of 10.6%.

Quarterly data show positive changes in labor market sentiment. The reported probability of finding a job in the next three months among unemployed respondents increased from 24.5% in October to 30.1% in January.

Among employed respondents, the expected probability of unemployment in the next three months decreased from 8.5% in October to 8.2% in January.

Consumers expect house prices to rise by 3.7% over the next 12 months, slightly higher than December’s 3.6%. Expectations for house price growth vary somewhat across income categories, with the lowest and highest income quintiles expecting increases of 3.9% and 3.5%, respectively.

Mortgage rates over the next 12 months are expected to remain at 4.7% in January.

Low-income households expect the highest mortgage rate in the next 12 months at 5.4%, while high-income households expect the lowest at 4.2%. The proportion of households reporting tighter credit access over the past 12 months increased in January, as did the proportion expecting credit conditions to tighten over the next 12 months.

The proportion of consumers who applied for credit in the past three months decreased from 15.7% in October to 14.8% in January.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.