ECB survey finds higher inflation expectations and weaker growth outlook

Euro-area consumers expect inflation to rise slightly over the next year and have become more pessimistic about economic growth and unemployment, according to the European Central Bank’s September survey.

Median expectations for inflation over the next 12 months edged up to 3.1%, from 3.0% in August. Expectations for inflation three and five years ahead were unchanged, at 2.9% and 2.5% respectively. The survey was conducted between 27 August and 28 September among adults in 11 euro-area countries.

Consumers’ expectations for economic growth over the coming year fell to minus 1.5%, from minus 1.2% in August. Their expected unemployment rate in 12 months rose to 11.3%, from 11.0%. The ECB said respondents continued to expect only a slight rise from the perceived current unemployment rate of 10.6%, suggesting they saw the labour market as broadly stable.

Expectations for nominal income growth increased to 1.1% from 1.0%, while expected spending growth rose to 3.7% from 3.6%. Consumers also expected home prices to rise by 3.5% over the next year, up from 3.4%. Expected mortgage rates were unchanged at 4.9%.

The survey also found that the net share of households reporting tighter access to credit over the previous 12 months increased compared with August. The net share expecting tighter conditions over the next 12 months also rose.

The ECB’s monthly online survey covers about 19,000 adults in Belgium, Germany, Ireland, Greece, Spain, France, Italy, the Netherlands, Austria, Portugal and Finland. The bank says its results complement other data used for policy analysis and do not represent the views of its decision-making bodies or staff. Results for October are scheduled for release on 27 November.