Consumers in euro area countries perceive and expect significant reductions in inflation, the European Central Bank (ECB) said in a Friday (July 24) press release.
The ECB Consumer Expectations Survey for June found that compared with May, median consumer perceptions of inflation over the past 12 months decreased “significantly.” The figure dropped from 4.0% in May to 3.6% in June, according to the release.
The survey also found that median expectations for inflation over the next 12 months also decreased “significantly,” from 3.5% to 3.0%.
There was less change in expectations over the longer term. The survey found that median expectations for inflation three years ahead decreased slightly, from 2.9% in May to 2.8% in June, while those for five years ahead remained unchanged at 2.4%.
“Uncertainty about expectations for inflation over the next 12 months decreased for the second consecutive month, but remained higher than the level prevailing before the start of the war in the Middle East,” the release said. “Respondents in lower-income quintiles continued to report higher inflation perceptions and expectations, on average, than those in higher-income quintiles.”
The ECB’s findings about inflation expectations stand in contrast to a recent survey of American consumers, which found these consumers’ median inflation expectations rose in June.
However, the ECB’s findings about lower-income consumers mirrored PYMNTS Intelligence findings that the most financially constrained American consumers are trimming nonessential expenses.
In another Friday press release, the ECB said professional forecasters responding to a quarterly survey reported little change in their inflation expectations.
The ECB Survey of Professional Forecasters for the third quarter found that compared to the previous survey, respondents’ expectations for headline inflation in 2026 were unchanged at 2.7%.
Professional forecasters’ expectations for headline inflation in 2027 moved up by 0.1 percentage points to 2.2%, while those for 2028 were unchanged at 2.0%.
“Responses to a special question on to the war in the Middle East suggested limited expected indirect and second-round effects, which were concentrated in 2026,” the release said. “For inflation, the balance of risks was tilted somewhat to the upside in 2026 and more balanced thereafter.”
