Euro Zone Consumers Downgrade Inflation Expectations to Lowest Level in 3 Years, Reports Reuters

FRANKFURT – According to a European Central Bank poll released on Friday, consumers in the Euro zone have reduced their inflation expectations for the next 12 months to the lowest level in three years. This development signals that the ECB is making progress in its efforts to control inflation.

The Consumer Expectations Survey serves as an indicator of households’ confidence in the ECB’s ability to achieve its 2% inflation target, which can in turn affect their spending, saving, and wage demands.

In the latest survey from August, the median respondent anticipated prices would rise by 2.7% over the next year, marking the slowest expected growth since September 2021 and down from 2.8% in July. Additionally, consumers have lowered their inflation expectations for the next three years from 2.4% to 2.3%, the lowest figure since June.

The ECB has recently lowered borrowing costs, following an initial cut in June, in response to diminishing growth projections and expectations for a gradual decrease in inflation over the upcoming year.

Furthermore, sources have indicated that more dovish members of the euro zone central bank are advocating for an additional rate reduction in October, in light of several recent disappointing economic reports. However, this move is anticipated to face opposition from their more hawkish counterparts.