FX.co ★ Eurozone Consumers' 12-Month Inflation Expectations Lowest Since Dec 2021 - ECB

The European Central Bank's (ECB) latest survey revealed that consumers in the euro area have the lowest inflation expectations for the upcoming year since December 2021. The survey, conducted in March, showed a slight decrease in median predictions for annual inflation, slipping to 3.0 percent from February's 3.1 percent.

The ECB aims for an inflation rate of 2.0 percent. Around 19,000 adult consumers from 11 euro area countries were surveyed, and the collective belief of inflation for the past 12 months has fallen for six consecutive months, now at 5.0 percent compared to February's 5.5 percent.

In contrast, the official data indicated that the actual euro area inflation slowed down to 2.4 percent in March from 2.6 percent in February. Core inflation, that excludes food and energy prices, eased to 2.9 percent from 3.1 percent a month before.

Expected inflation over a three-year period remained consistent for the fourth month in a row, stable at 2.5 percent according to the survey. Future income increased slightly to 1.3 percent from 1.4 percent, but the spending growth expectations for the next 12 months have decreased from 3.7 percent to 3.6 percent.

The survey also revealed that households are continuing to anticipate a negative economic growth of 1.1 percent for the forthcoming year. However, the expected unemployment rate seemed to provide a glimmer of hope, as consumers are anticipating a 10.7 percent unemployment rate over the next 12 months, slightly lower than February's prediction of 10.9 percent.

The expectation is for future unemployment rates to hover slightly above the current rate of 10.4 percent, suggesting a generally steady labor market according to the ECB. As for the housing market, consumers are expecting house prices to grow by 2.4 percent over the next 12 months, a figure that matches February's prediction. Additionally, the outlook for mortgage interest rates in the upcoming year has declined slightly from 5.1 percent to 5.0 percent as per the survey.