ECB Surveys Show Rising Eurozone Inflation Expectations

(RTTNews) - Euro area consumers' inflation expectations for the next 12 months increased for a third straight month in December, while professional forecasters revised up the projections for this year and next, separate surveys by the European Central Bank showed on Friday.

Median expectations for inflation over the next 12 months increased, for the third month in a row, to 2.8 percent from 2.6 percent, results of the monthly ECB Consumer Expectations Survey for December revealed. Consumers' expectations for inflation three years ahead were unchanged at 2.4 percent in December.

The survey also showed that uncertainty about inflation expectations over the next 12 months remained unchanged, for the fifth month in a row, at its lowest level since February 2022. Meanwhile, the ECB Survey of Professional Forecasters for the first quarter revealed that the HICP inflation expectations for this year were revised up by 0.2 percentage points to 2.1 percent. The projection for next year was unchanged at 1.9 percent. Experts forecast inflation at 2.0 percent in 2027.

Core inflation, which excludes prices of energy, food, alcohol, and tobacco, was forecast at 2.2 percent this year and 2.0 percent next year, same as in the previous survey. Core inflation is expected to remain at 2.0 percent in 2027. Longer term, which refer to 2029, inflation expectation was unchanged at 2.0 percent, while the prediction for the core figure was lowered to 1.9 percent from 2.0 percent. Price growth in the euro area accelerated to a five-month high of 2.4 percent in December, while core inflation held steady at 2.7 percent. The European Central Bank lowered its interest rates for a fourth policy session in a row on Thursday and is likely to opt for more easing going forward as policymakers seek neutrality amid a slump in Eurozone growth and expectations for inflation to return to target over the course of the year.