ECB, inflation expectations increased at the beginning of the year

ECB Kazimir another rate hike is needed preferably next week

(Finance) – Le expectations medians of Eurozone consumers For inflation for the next 12 months are increase, nominal income growth expectations remained stable and economic growth expectations became less negative. This is what emerges from the Consumer Expectations Survey of European Central Bank (ECB) referring to the month of January 2024, compared to the previous month.

Inflation

The median rate of perceived inflation over the previous 12 months declined further, for the fourth consecutive month, to 6.0%, from 6.9% in December. Median expectations for inflation over the next 12 months rose to 3.3% from 3.2%, while those for three-year inflation remained unchanged at 2.5%.

Trends in inflation perceptions and expectations remained relatively aligned between various income groups, although slightly higher for the two lowest income quintiles. The most interviewed young (aged 18 to 34) continued to report lower inflation perceptions and expectations than older respondents (those aged 35 to 54 and those aged 55 to 70).

Income and consumption

Consumer expectations for the growth of nominal income remained unchanged at 1.2%. Perceived nominal spending growth over the previous 12 months declined further to 6.6% from 6.8% in December, the lowest level since October 2022. This decrease was observed across all age groups. The growth expectations of nominal expense over the next 12 months they increased marginally to 3.7% from 3.6% in December. Once again, spending perceptions and expectations have followed developments in inflation perceptions and expectations very closely.

Labor market and economic growth

The expectations of economic growth for the next 12 months they were less negative, standing at -1.1%, compared to -1.3% in December. The expectations for the unemployment rate over the next 12 months they fell to 10.9%, from 11.2% in December. Consumers continue to expect the future unemployment rate to be slightly higher than the perceived current unemployment rate (10.6%), implying a broadly stable job market.

Access to housing and credit

Consumers expected the price of their house increase by 2.2% in the next 12 months, unchanged compared to December. Households in the lowest income quintile still expect home price growth to be 1.0 percentage point higher than those in the highest income quintile. The expectations on mortgage interest rates for the next 12 months they fell further to 5.1%, from 5.3% in December.

Perceived access to credit in the previous 12 months eased slightly compared to December, and thecredit access become easier over the next 12 months than in December. At the same time, the share of consumers who said they had applied for credit in the past three months, measured on a quarterly basis, fell to 16.8% in January, from 17.3% in October. (Results of access to housing and credit).

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