Euro Area Inflation Expectations Fall for 3rd Month

Median expectations for price growth over the next 12 months in the Euro Area increased to 3% in August 2026 from 2.9%. Expectations for inflation three years ahead also increased, to 2.9% from 2.7%, while the five-year outlook went up to 2.5% from 2.4%. Uncertainty about expectations for inflation over the next 12 months decreased, but remained higher than the level prevailing before the start of the conflict in the Middle East. Lower-income households continued to perceive and anticipate higher inflation than higher-income groups, while younger consumers maintained more moderate expectations than older respondents. Also, expectations for nominal income growth were unchanged at 1%. Those for economic growth remained at -1.2% while expectations for the unemployment rate 12 months ahead decreased to 11% from 11.2%. In addition, consumers expected the price of their home to increase by 3.4% over the next 12 months and mortgage interest rates to increase 4.9%, the same as in July.

Median expectations for price growth over the next 12 months in the Euro Area eased to 2.9% in July 2026 from 3% in June. Expectations for inflation three years ahead also declined, to 2.7% from 2.8%, while the five-year outlook remained unchanged at 2.4%. However, uncertainty surrounding near-term inflation expectations remained elevated compared with levels seen before the Middle East conflict. Lower-income households continued to perceive and anticipate higher inflation than higher-income groups, while younger consumers maintained more moderate expectations than older respondents. Expected nominal income growth over the next year edged down to 1%, while spending-growth expectations held steady at 3.6%. Consumers also became slightly less pessimistic about economic activity, with expected growth improving to -1.2% from -1.4%. Meanwhile, home-price growth expectations were stronger among lower-income households, averaging 4%, compared with 3.1% among the highest-income group.

Eurozone median inflation expectations for the next 12 months fell for a second consecutive month to 3% in June 2026, the lowest since February, from 3.5% in May. Consumers expect the price of their home to increase by 3.4% over the next 12 months, compared with 3.6% in May. Expectations for mortgage interest rates went up to 5% from 4.9%. Meanwhile, expectations for inflation three years ahead also declined to 2.8% from 2.9% while expectations for inflation five years ahead remained unchanged at 2.4%. Uncertainty about inflation over the next 12 months decreased for the second consecutive month, but remained higher than the level prevailing before the start of the war in the Middle East. Elsewhere, expected nominal spending growth over the next 12 months decreased to 3.6% from 3.8% in May. Expectations for economic growth over the next 12 months increased to -1.4% from -1.7% and expectations for the unemployment rate 12 months ahead decreased to 11.2% from 11.3% in May.