According to a recent ECB survey, consumers from the Eurozone expect an increase in inflation. This is the first time since the autumn season that we got reports like this from the ECB!
On average, consumers are expecting the prices to increase by 5.0% in the next 12 months. Earlier, the consumers were only expecting a 4.6% increase in prices!
Long-Term Inflation Expected At 2.9%
The long-term expectation for inflation is now 2.9% within the next three years. Just a month earlier, the same value was 2.4% only! This is an indication that the public from Eurozone believes inflation will rise further in the coming years.
For the ECB, this is not a good development at all since it is trying to control the inflation crisis in the Eurozone. In fact, the ECB also decided to slow down its pace of rate hikes just a week ago. However, it did mention that more rate hikes are on the card to win the final battle against inflation.
Another interesting fact from the ECB survey was related to income growth. The survey revealed that the EU public is not expecting any increase in their income during the next 12 months. On the contrary, they are expecting a 3$ increase in spending.
This means that EU consumers will experience a decrease in savings which will ultimately affect consumer spending in the country.
Over all, around 14,000 people from different EU regions were surveyed to collect this data. The sheer size of survey respondents is one of the reason why it is also used by the ECB policymakers.
For now, it appears that the public sentiment around the income, spending, and inflation is not favourable at all. And there's a good chance that even the ECB will take notice of these findings. As for the inflation, it is now more of a wait-and-see game as the ECB tries to figure out its next move.