Eurozone sees inflation slowdown – ECB survey

Eurozone consumers’ inflation expectations eased last month, a European Central Bank (ECB) survey showed on Tuesday.

Expectations for inflation in the next 12 months dropped to 2.9 per cent from 3.0 per cent, reaching their lowest level since September 2021.

Similarly, expectations for inflation three years ahead slipped to 2.4 per cent from 2.5 per cent, remaining above the ECB’s 2 per cent target.

Inflation, which stood at 2.4 per cent last month, has seen a rapid decline over the past year. Despite this, the ECB anticipates it will hover around its current level for the remainder of the year before disinflation resumes, aiming to reach the target in 2025.

The ECB noted a convergence of inflation perceptions across age groups, with younger respondents consistently reporting lower inflation expectations.

With a substantial slowdown in price growth, the ECB is likely to implement a rate cut on June 6. However, some policymakers urge caution, highlighting lingering price pressures and the uncertainty of achieving the inflation target.

Income expectations remained steady, while consumer sentiment about growth improved slightly. Consumers predicted a 0.8 per cent contraction in the next year, compared to a 1.1 per cent drop seen previously. Additionally, expectations for unemployment indicated a stable labour market, according to the ECB.