Euro zone consumer expectations for inflation in the year ahead rose in October but predictions for three years out held steady at a rate still well above the European Central Bank’s 2% target, the ECB said in a monthly survey on Wednesday.
Inflation soared this year on sky high energy and food prices, and the ECB has been raising rates at a record pace to temper at least longer-term expectations.
Median inflation expectations over the next 12 months rose to 5.4% in October from 5.1% in September, while expectations for inflation three years ahead were unchanged at 3.0%, the ECB said based on a survey of about 14,000 people in six of the euro zone’s biggest countries.
Inflation hit a record high 10.6% in October and dropped to 10% last month but its decline in early 2023 is expected to be slow before disinflation accelerates in the second half of the year.
The increase in the inflation outlook even came as consumers became more pessimistic about growth and employment, the ECB said.
Economic growth expectations for the next 12 months declined to -2.6% from -2.4% in September while unemployment is seen rising and income growth is expected to trail inflation.