Eurozone Consumers Expect Cooling Inflation, But Experts Remain Cautious

According to a recent survey by the European Central Bank (ECB), consumers in euro area countries expect significant reductions in inflation. The ECB's Consumer Expectations Survey for June found that median consumer perceptions of inflation over the past 12 months decreased significantly from 4.0% in May to 3.6% in June.

Similarly, median expectations for inflation over the next 12 months also decreased significantly, from 3.5% to 3.0%. However, there was less change in expectations over the longer term, with median expectations for inflation three years ahead decreasing slightly from 2.9% in May to 2.8% in June.

The survey found that uncertainty about expectations for inflation over the next 12 months decreased for the second consecutive month but remained higher than the level prevailing before the start of the war in the Middle East. Respondents in lower-income quintiles continued to report higher inflation perceptions and expectations compared to those in higher-income quintiles.

In contrast, professional forecasters responding to a quarterly survey reported little change in their inflation expectations. The ECB Survey of Professional Forecasters for the third quarter found that respondents' expectations for headline inflation in 2026 were unchanged at 2.7%, while expectations for headline inflation in 2027 moved up by 0.1 percentage points to 2.2%.