EU consumer inflation expectations for 12 months fall further in May

Expectations for nominal income growth over the next 12 months increased slightly, while expectations for nominal spending growth continued to decline.

Expectations for economic growth over the next 12 months became less negative and the expected unemployment rate in 12 months’ time decreased.

The median rate of perceived inflation over the previous 12 months decreased to 8 per cent in May from 8.9 per cent in April in the bloc.

Median expectations for inflation over the next 12 months also decreased to 3.9 per cent from 4.1 per cent in April, while those for inflation three years ahead remained unchanged at 2.5 per cent.

Uncertainty about inflation expectations 12 months ahead fell to its lowest level since March 2022 after the start of Russia’s war in Ukraine, although it remained above levels observed prior to this.

Consumers in May expected their nominal income over the next 12 months to increase by 1.2 per cent compared with 1.1 per cent in April.

The higher income groups reported a sharper drop in expectations for nominal spending growth than the lower two quintiles of the income distribution. (Income and consumption results)

Economic growth expectations for the next 12 months were slightly less negative in May, standing at minus 0.7 per cent compared with minus 0.8 per cent in April.

Expectations for the unemployment rate 12 months ahead decreased to 11 per cent from 11.2 per cent in April.

Consumers continued to expect the future unemployment rate to be only slightly higher than the perceived current unemployment rate (10.9 per cent), implying a broadly stable labour market, ECB said.

Fibre2Fashion News Desk (DS)