Euro Zone Consumers Raise Inflation Expectations, ECB Survey Finds

Source: Reuters via Investing.com
Date: September 26, 2025

Euro‑zone consumers raised their short- and medium‑term inflation expectations in August, according to the European Central Bank’s monthly Consumer Expectations Survey. 

Median inflation expectations over the next 12 months rose to 2.8 % (from 2.6 % in July).

Over a 5‑year horizon, expectations increased to 2.2 % (from 2.1 %), their highest since August 2022. 

The expectation for 3 years ahead remained steady at 2.5 %.

Consumers also adjusted their outlook on incomes and unemployment:

Expected nominal income growth for the next 12 months rose to 1.1 % (from 0.9 %). 

Their view on spending growth held steady. Investing.com

They foresee a slight increase in unemployment.

On growth: they expect the economy’s 1‑year growth to remain weak, with the median estimate unchanged at –1.2 %.

Regarding policy context: the ECB cut its rates by 2 percentage points in the year to June, but has held them since, judging inflation to be near its 2 % target, with no immediate need for adjustment. Investing.com

However, within the ECB there is tension:

Some policymakers worry that a strong euro and weak growth could drag inflation persistently below target, prompting further rate cuts.

Others argue that Germany’s fiscal stimulus and ongoing domestic pressures might sustain inflation, removing the need for additional support.