Eurozone Inflation Expectations Increase 2.8 Percent in August

(MENAFN) The eurozone saw a rise in short-term inflation expectations to 2.8% in August, up from 2.6% in July, according to the European Central Bank (ECB)’s consumer survey published on Friday.

"Uncertainty about inflation expectations over the next 12 months increased slightly in August. Respondents in lower income quintiles continued to report on average slightly higher inflation perceptions and short-horizon expectations than those in higher income quintiles, a trend observed since 2023," the ECB stated.

Despite these differences, inflation perceptions and expectations remained largely consistent across income groups. Younger participants aged 18-34 reported lower inflation perceptions and expectations compared to older respondents aged 35-54 and 55-70, though this gap has narrowed compared to previous years, the statement added.

Inflation expectations looking out three years held steady at 2.5%.

Consumers in the euro area also projected an economic contraction of -1.2% over the next 12 months.

The ECB’s Consumer Expectations Survey, conducted monthly, gathers insights from roughly 19,000 individuals across Belgium, Germany, Ireland, Greece, Spain, France, Italy, the Netherlands, Austria, Portugal, and Finland.

Inflation outlooks are crucial for the ECB’s monetary policy decisions, guiding the pace and extent of interest rate adjustments.

Annual inflation in the eurozone edged up to 2.1% in August from 2% in July, while the ECB maintains a medium-term inflation target of 2%.

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