Eurozone consumer one-year inflation expectations were revised lower again in May, a new survey released by the European Central Bank (ECB) on Wednesday shows. However, consumers are seeing long-term price rises taper off less quickly than the ECB would like.
The survey also shows modest expectations for revenue growth, which should bring relief to ECB officials, which is faced with repeated interest rate hikes to curb persistent inflation in the 20 countries that share the euro.
A minimum since March 2022
The highest 12-month average inflation expectations of eurozone consumers 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. Three-year consumer inflation expectations were unchanged at 2.5%, but this figure is still above the ECB’s 2% target.
As for nominal income growth, expected at 1.2%, the bloc’s consumers expect inflation to lag over the next 12 months, as spending is expected to increase by 6.8%. This should translate into lower savings or higher borrowing, which should ease fears of a possible wage/price spiral.
Source: BFM TV
