Median expectations for inflation over the next 12 months fell in May this year to their lowest level since September 2021.

Uncertainty about inflation expectations over the next 12 months remained unchanged at its lowest level since February 2022, when Russia invaded Ukraine, an ECB release said.

Inflation perceptions and expectations remained relatively closely aligned across income groups. Younger respondents (aged 18-34) continued to report lower inflation expectations than older respondents (those aged 35-54 and those aged 55-70).

Economic growth expectations for the next 12 months turned more negative, standing at minus 0.9 per cent in June compared to minus 0.8 per cent in May.

Meanwhile, expectations for the unemployment rate 12 months ahead decreased to 10.6 per cent from 10.7 per cent in May—the 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 (10.3 per cent), implying a broadly stable labour market.

Expectations for nominal income over the next 12 months increased to 1.4 per cent in June from 1.2 per cent in May, while spending growth expectations over the next 12 months remained unchanged.

Perceptions of nominal spending growth over the previous 12 months decreased further to 5.8 per cent in June from 5.9 per cent in May and 6.3 per cent in April. The latest data point extends a sustained decline which started in March 2023.

Expectations for nominal spending growth over the next 12 months remained stable at 3.3 per cent in June.

Fibre2Fashion News Desk (DS)