Euro zone consumers cut their inflation expectations for the following 12 months again in May, although they still saw prices growing faster than the European Central Bank would like for years to come, a new ECB poll showed today.
The ECB’s monthly Consumer Expectations Survey also showed modest expectations for income growth.
The survey was likely to provide some relief to policymakers deploying relentless interest rate hikes to battle a bout of high inflation in the 20 countries that share the euro.
The median respondent in the May edition of the survey expected prices to grow by 3.9% in the following 12 months, down from 4.1% in April and 5% in March.
Uncertainty about inflation expectations 12 months ahead, as measured by the dispersion in responses, fell to its lowest level since March 2022, straight after the start of Russia’s war in Ukraine.
But consumers expected inflation three years ahead to come in at 2.5%, unchanged from April and still above the ECB’s 2% target.