FRANKFURT, Jan 8 (Reuters) – Euro zone consumers kept their inflation expectations unchanged in November, predicting a steady slowdown in price growth towards the European Central Bank’s 2% target in the coming years, an ECB survey showed on Thursday.
Inflation has been hovering around 2% most of the past year and fresh data out on Wednesday put price growth right at 2% in December, as falling energy costs offset rising services prices.
Consumers across the currency bloc perceived inflation to be somewhat higher – 3.1% in November – but saw it at 2.8% over the next year, 2.5% three years ahead, and 2.2% five years out, the ECB said, based on a survey of 19,000 adults in 11 euro zone countries.
Inflation, tamed by record-quick ECB rate hikes in 2022 and 2023, has been a non-issue in recent months and, if anything, price growth could go even lower given a persistent drag from falling oil and gas prices.
However, the ECB is unlikely to ease policy for now to stop price growth from going too low, as projections see a rebound later, partly on steady economic growth.
Consumers, who are generally more pessimistic than professional forecasters, expect the economy to contract by 1.3% over the coming year, a more pessimistic scenario than October’s 1.1% contraction expectation.
Most forecasters see the euro zone expanding at a rate between 1% and 1.5% this year, after growth of about 1.4% in 2025.
(Reporting by Balazs Koranyi; Editing by Alex Richardson)
Comments