Euro area consumers reported slightly lower inflation over the past year in July, while also trimming their expectations for price rises over the next 12 months and three years.
The median rate of inflation people said they had experienced over the previous 12 months eased to 3.5% in July from 3.6% in June, according to the latest Consumer Expectations Survey published by the European Central Bank on Friday.
Median inflation expectations for the next 12 months slipped to 2.9% from 3.0%, while expectations three years ahead fell to 2.7% from 2.8%.
Longer-term expectations were unchanged, with the median forecast for inflation five years ahead staying at 2.4%.
Uncertainty around 12-month inflation expectations was unchanged and remained above levels seen before the start of the war in the Middle East.
Lower-income households continued to report higher inflation perceptions and expectations than higher-income households on average, while people aged 18–34 reported lower inflation perceptions and expectations than those aged 35–54 and 55–70.
Consumers also became slightly less optimistic about pay rises, with expected nominal income growth over the next 12 months edging down to 1.0% from 1.1% in June.
Expected nominal spending growth over the next 12 months was unchanged at 3.6%, while perceived spending growth over the previous 12 months also held steady at 5.1%.
Growth and jobs outlook steadies
Expectations for economic growth over the next 12 months became less negative, with the median reading rising to -1.2% from -1.4% in June, the ECB said.
The expected unemployment rate 12 months ahead was unchanged at 11.2%, while respondents put the perceived current unemployment rate at 10.6%.
Quarterly survey questions pointed to weaker labour-market sentiment, with unemployed respondents putting their chance of finding a job in the next three months at 30.8% in July, down from 32.1% in April.
Employed respondents put the probability of losing their job over the next three months at 9.8% in July, up from 8.8% in April.
In housing, consumers’ expectations for home price growth over the next 12 months were unchanged at 3.4%, while expectations for mortgage interest rates in a year’s time edged down to 4.9% from 5.0% in June.
The survey was conducted online among around 19,000 adults across 11 euro area countries between 2 and 27 July, and the next set of results is due on 18 September.
