INFLATION expectations among eurozone consumers rose for the year ahead and held steady for three years out, a new survey by the European Central Bank showed on Friday (Feb 23), adding to evidence that the final stage of taming price growth may be difficult.

Inflation came down rapidly last year and now stands just below 3 per cent, but the ECB said it could take more than another year to get it down to its 2 per cent target, despite a record string of interest rate hikes and anaemic economic growth.

Median expectations for inflation over the next 12 months rose to 3.3 per cent in January from 3.2 per cent December, while expectations for three years ahead remained unchanged at 2.5 per cent, the ECB said, based on a survey of 19,000 adults in 11 eurozone countries.

Although energy prices are well below expectations and growth is weak, wage growth remains quick and policymakers have repeatedly said they need more comforting labour market data before they can sound the all clear and start cutting rates.

The survey showed that expectations for nominal income growth remained unchanged at 1.2 per cent, but consumers persistently underestimate wage growth and the ECB expects compensation per employee to rise by 4.6 per cent this year.

Consumers continued to expect slightly negative economic growth ahead but reduced their unemployment expectations. REUTERS

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL