ECB September Survey Shows Eurozone Consumers Lifted Near-Term Inflation Expectations to 3.1%

Eurozone consumers nudged their near-term inflation expectations higher in September, according to the European Central Bank's monthly Consumer Expectations Survey released on October 23. The 12-month ahead inflation expectation rose to 3.1% from 3.0% in August, in line with analyst estimates, while the 3-year ahead expectation held steady at 2.9% and the 5-year ahead expectation remained unchanged at 2.5%.

Consumers also revised their perception of past inflation slightly upward, placing the previous 12-month inflation rate at 3.6%, up from 3.5% in August, compared with an actual September rate of 3.8%. Rising energy prices tied to the ongoing conflict in the Middle East were cited as a driver of the firmer near-term outlook. Nominal spending growth expectations edged up to 3.7% from 3.6%, and nominal income growth expectations ticked up to 1.1% from 1.0%.

On the labor market, consumers grew more pessimistic, lifting their 12-month ahead unemployment expectation to 11.3% from 11.0% in August. Perceived current unemployment stood at 10.6%, well above the actual August unemployment rate of 6.4%, highlighting a persistent gap between consumer sentiment and official labor market data. Expected economic growth over the next 12 months deteriorated to minus 1.5% from minus 1.2% in August, signaling deepening concern about the broader economic outlook.