Eurozone consumers raise inflation expectations in headache for ECB
EUROZONE consumers have raised their expectations for inflation over the next 12 months to 4 per cent, a European Central Bank survey showed on Wednesday (Nov 8), in a potential headache for the ECB in its effort to rein in prices.
Households’ forecasts for inflation are by nature imprecise but they can influence wage demands, spending and saving – three crucial factors for the setting of retail prices.
The ECB’s Consumer Expectation Survey, carried out in September and released on Wednesday, showed the median respondent thought inflation would be 4.0 per cent in the next 12 months, up from 3.5 per cent in August and climbing to the highest level since the spring.
The ECB also uses the survey as a gauge of whether households are keeping faith in its ability to bring inflation back to its 2 per cent target over the medium term amid a global debate about whether such goals should be raised.
Here the picture was at least not getting worse, with the median respondent putting inflation at 2.5 per cent in three years’ time, unchanged from the previous survey round but still above where the ECB’s goal.
The ECB also raised its inflation forecast for 2024 in September, mainly as a result of higher energy prices, as it raised interest rates to record highs.
It now expects prices to rise by 5.6 per cent this year, 3.2 per cent in 2024 and 2.1 per cent in 2025. REUTERS
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