FX.co ★ Euro Area Inflation Expectations Fall for 3rd Month

Median expectations for price growth in the euro area over the next 12 months eased to 2.9% in July 2026, down from 3% in June. Expectations for inflation three years ahead also declined, to 2.7% from 2.8%, while the five-year outlook remained unchanged at 2.4%.

Despite this moderation, uncertainty around short‑term inflation expectations remained elevated compared with levels observed before the onset of the Middle East conflict. Lower-income households continued to perceive and anticipate higher inflation than higher-income households, whereas younger consumers maintained more moderate expectations than older respondents.

Expected nominal income growth over the next 12 months edged down to 1%, while expectations for spending growth were unchanged at 3.6%. Consumers also became slightly less pessimistic about overall economic activity, with expected growth improving to -1.2% from -1.4%.

At the same time, home-price growth expectations were stronger among lower-income households, averaging 4%, compared with 3.1% among the highest-income group.