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While consumer expectations for inflation are by nature
imprecise, they can influence wage demands, spending and saving.
They are also an important input in gauging whether the public
has faith in the ECB achieving its inflation goal, amid a global
debate about whether such targets should be raised.
The ECB's Consumer Expectation Survey, carried out in August and
released on Wednesday, showed the median respondent thought
inflation would be 2.5% in three years' time, up from 2.4% in
the previous survey around a month earlier.
Consumers' views about inflation in the coming 12 months showed
a slight increase to 3.5%, from 3.4% in July.
The ECB has said that long-term inflation expectations from
economists, investors and consumers are "at around 2%", but
cautioned that some projections have risen and should be
monitored.
The central bank for the 20 countries that use the euro raised
the rate it pays on bank deposits to a record-high of 4.0% last
month as part of its bid to bring down inflation, which briefly
hit double digits a year ago amid high energy costs and
post-pandemic boom in demand, while supply chains were still
disrupted.
The ECB now expects prices to rise by 5.6% this year, 3.2% in
2024 and 2.1% in 2025.
Wednesday's survey also showed households took a slightly dimmer
view of the economy, which they expected to contract by 0.8% in
the coming 12 months, compared with 0.7% in July.
But they turned more optimistic about their income - seen
growing by 1.2% from 1.1% - and raised their predictions for
home price inflation, to 2.3% from 2.1%, for the first time
since March.
(Reporting by Francesco Canepa; Editing by Alison Williams and
John Stonestreet)
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