ECB Survey: Inflation Expectations Rise to 3.0%
Median inflation expectations increased across all time horizons in the latest European Central Bank survey, while income and spending forecasts remained stable.
Median consumer expectations for inflation over the next 12 months increased to 3.0%. The figure rose from 2.9% in July. Perceived inflation over the past 12 months remained unchanged at 3.5%. These data points come from the European Central Bank's August 2026 survey.
Expectations for inflation three years ahead climbed to 2.9%. The five-year horizon expectation increased to 2.5%. Both figures mark a rise from the previous month. Uncertainty regarding 12-month inflation expectations decreased. However, uncertainty levels remain above pre-conflict baselines.
Income and spending outlook remains flat
Expectations for nominal income growth over the next 12 months held at 1.0%. This figure is unchanged from July. Perceived spending growth over the previous year increased to 5.2%. Expected spending growth for the coming year stayed at 3.6%. The bottom income quintile reports higher income growth expectations than the top quintile.
Labor market expectations show slight improvement
Expectations for economic growth over the next 12 months remained at -1.2%. The expected unemployment rate 12 months ahead decreased to 11.0%. This is down from 11.2% in July. Households in the lowest income bracket expect a higher unemployment rate of 13.4%. The top income bracket expects a rate of 9.4%. The perceived current unemployment rate stands at 10.5%.
Housing prices and mortgage rates stable
Consumers expect home prices to rise by 3.4% over the next 12 months. This expectation is unchanged from June. Expectations for mortgage interest rates in 12 months remain at 4.9%. The net percentage of households reporting tighter credit access declined in August. Expectations for future credit conditions also eased slightly compared to July.
