Median inflation expectations for three years ahead also dropped by 0.1 percentage point (pp) in August to 2.3 per cent, back to their June level, according to the European Central Bank (ECB).

Younger respondents (aged 18-34) continued to report lower inflation perceptions and expectations than older respondents (those aged 35-54 and 55-70).

Expectations for nominal income growth over the next 12 months increased to 1.2 per cent in August from 1.1 per cent in June, while expectations for spending growth over the next 12 months remained unchanged at 3.2 per cent.

Perceptions of nominal spending growth over the previous 12 months decreased further to 5.2 per cent from 5.4 per cent in July and 5.8 per cent in June. The latest datapoint continues a sustained decline that started in March 2023.

Expectations for economic growth over the next 12 months became less negative, standing at minus 0.9 per cent, compared with minus 1 per cent in July, while the expected unemployment rate in 12 months ahead decreased to 10.4 per cent in August from 10.6 per cent in July, their lowest level since the start of the series.

Consumers continued to expect the future unemployment rate to be only slightly higher than the perceived current unemployment rate (10 per cent), implying a broadly stable labour market, an ECB release noted.

Fibre2Fashion News Desk (DS)