The European Central Bank (ECB) building, in Frankfurt, Germany
FRANKFURT (Archyde.com) – Consumer inflation expectations in the euro zone were revised slightly upwards in December, suggesting that recent interest rate hikes and lower energy prices have n do not yet have a sufficient impact on fears in this area.
Price inflation in the euro zone, which peaked above 10% in October, fell to 8.5% in January, according to the first estimate published last week by Eurostat. But so-called core inflation, which excludes energy and unprocessed food, continues to persist, with a rate of 7.0% over one year following 6.9% in December.
According to the survey published on Tuesday by the European Central Bank (ECB), median inflation expectations in three years for consumers in the euro zone fell from 2.9% to 3% in December. That on their expectations in the 12 months was however maintained at 5%.
The ECB raised interest rates by 50 basis points last week and said it expects at least another hike of the same magnitude in March following having raised the cost of credit by 300 basis points since July 2022.
A rise in inflation expectations weighs on companies more exposed to wage demands, thus maintaining a price-wage spiral that is difficult to control while the ECB wants to bring inflation down to around 2% over time.
The institution’s latest survey also shows a slight improvement in expectations for growth in domestic product (GDP) and wages in the community bloc, as well as a slight decline in the outlook for unemployment.
(Reporting by Balazs Koranyi; French version by Claude Chendjou, edited by Kate Entringer)
