Eurozone consumers reduce short-term inflation expectations, ECB says

Euro zone consumers have lowered their inflation expectations for the next 12 months, a sign that the ECB’s credit-tightening efforts are having an impact, according to a European Central Bank survey released on Tuesday.

The survey of consumer expectations is used by authorities to assess whether the sharpest series of interest rate rises in the history of the euro has convinced households that inflation, once out of control, will return towards the inflation target of the euro by 2%.

The latest survey, conducted in December across an expanded sample of 11 countries, showed that average households expect prices to rise by 3.2% over the next 12 months, down from 3.5% in the previous month.

On the other hand, inflation expectations for the next three years remained slightly above the ECB’s target, increasing slightly from 2.4% to 2.5%.

Results from previous months have been reworked to include responses from Ireland, Greece, Austria, Portugal and Finland, which are now also part of the survey.

They join Belgium, Germany, Spain, France, Italy and the Netherlands in increasing survey coverage to 96% of the eurozone’s GDP and 94% of its population.

The survey constitutes an important input for the ECB’s deliberations because households’ inflation expectations can influence wage demands and attitudes towards saving and spending.

Source: Terra

Rose

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