- Inflation expectations 1-year ahead at 4.0% vs 4.0% prior
- 3-year ahead at 2.9% vs 3.0% prior
- 5-year ahead 2.4% vs 2.4% prior
- Full report here
The survey showed that consumers perceived inflation over the previous 12 months at 4.0%, up from 3.5% in March. However, expectations for inflation over the next year remained unchanged at 4.0%.
Longer-term inflation expectations were stable to slightly lower. Expectations for inflation three years ahead declined to 2.9% from 3.0%, while five-year inflation expectations held steady at 2.4%, suggesting that consumers continue to believe inflation will gradually move closer to the ECB’s target over time.
Inflation uncertainty remained elevated, and lower-income households continued to report slightly higher inflation perceptions and expectations than wealthier households. Younger respondents generally expected lower inflation than older age groups.
Consumers became less optimistic about income growth. Expected nominal income growth over the next 12 months fell to 0.8%, down from 1.2% in March.
At the same time, households reported stronger spending trends. Perceived spending growth over the past year increased to 5.3%, while expected spending growth over the coming year rose to 4.3% from 4.1%. Lower-income households anticipated somewhat faster spending growth than higher-income households, potentially reflecting ongoing pressure from elevated living costs.
Consumers’ outlook for the broader economy became slightly more pessimistic. Expectations for economic growth over the next 12 months fell to -2.2%, compared with -2.1% in March, indicating that households continue to anticipate economic contraction rather than expansion.
Despite the weaker growth outlook, labour market expectations showed modest improvement. Consumers expected the unemployment rate in 12 months’ time to decline slightly to 11.2% from 11.3%.
Survey responses suggested a generally stable labour market, with the expected future unemployment rate remaining only slightly above the perceived current rate of 10.5%.
However, quarterly labour market indicators painted a mixed picture. Unemployed respondents reported a higher probability of finding a job within the next three months, rising to 32.1% from 30.1% in January. At the same time, employed respondents became more concerned about job security, with the perceived probability of losing their job increasing to 8.8% from 8.2%.
Income disparities remained evident, with lower-income households expecting significantly higher unemployment rates than wealthier households.
While longer-term inflation expectations remain stable and should give the ECB some comfort, a more negative growth outlook suggest that households remain wary about the economic environment ahead.
