Eurozone consumers forecast negative economic growth, ECB survey shows

Inflation expectations for the next 12 months in the eurozone rose to 2.8% in August, up from 2.6% in July, according to the results of a consumer survey published by the European Central Bank (ECB) on Friday.

The central bank said that uncertainty over inflation expectations increased slightly in August. Respondents from lower income groups continued to report slightly higher inflation perceptions and short-term expectations on average, a trend that has persisted since 2023.

Younger respondents (aged 18-34) reported lower inflation expectations compared with older age groups (35-70), although the gap has narrowed compared with previous years. Inflation expectations over the next three years remained stable at 2.5%.

Meanwhile, eurozone consumers expect economic growth to decline by 1.2% over the next 12 months.

The ECB’s Consumer Expectations Survey is conducted monthly, interviewing around 19,000 people across Belgium, Germany, Ireland, Greece, Spain, France, Italy, the Netherlands, Austria, Portugal and Finland.

Inflation expectations play a key role in the ECB’s monetary policy, helping to guide decisions on the level and pace of interest rate changes.

Annual inflation in the eurozone rose to 2.1% in August from 2% in July. The ECB’s medium-term inflation target remains 2%.

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