Daily Management Review

ECB survey: Consumer inflation expectations in eurozone grow in December


The results of the ECB survey, which were released on Tuesday, revealed that despite declining energy costs and rising interest rates, consumer inflation expectations in the euro area grew in December.

Due to lower gas costs, the annual inflation rate in the euro zone decreased after reaching a peak of 10% in October, although core inflation kept increasing.

The three-year median inflation expectation increased from 2.9% in November to 3% in December as shown by a poll of over 1,400 people in each of the six biggest eurozone nations. Expectations for inflation over the next year steadied around 5%.

To combat the rise in inflation expectations, the ECB increased the deposit rate by three percentage points since July and signaled that it would increase it by 50 basis points in March.

When inflation expectations are high, employees and businesses change how they define wage levels, which, in turn, leads to swift price increases and makes it challenging for the ECB to get inflation down to its 2% target.

source: ecb.europa.eu