Eurozone consumers lower inflation expectations again, ECB survey shows

Eurozone consumers lowered their expectation for inflation over the next 12 months in March but continued to see price growth above the European Central Bank’s 2 per cent target further out, the ECB’s Consumer Expectations Survey showed on Friday.

Inflation has fallen quickly over the past year and the ECB is planning to cut interest rates in June but the outlook further out remains clouded by rising energy costs, stubbornly high services inflation and continued geopolitical tensions that threaten to disrupt trade.

Eurozone consumers saw inflation in the next 12 months at 3.0 per cent, a tad below the 3.1 per cent expected a month earlier, the ECB said. It was the survey’s lowest reading since December 2021.

Meanwhile, inflation expectations for three years ahead held steady for a fourth consecutive month at 2.5 per cent, the ECB said in its monthly survey of around 19,000 consumers.

Expectations for income and spending growth both declined moderately, even as unemployment was seen lower than a month earlier.

Still, consumers continued to expect negative economic growth for the next year with GDP seen contracting by 1.1 per cent.