Eurozone consumers are dialing back their inflation expectations, according to the ECB’s latest Consumer Expectations Survey for June. Median one-year inflation expectations fell from 2.8% to 2.6%, fully reversing the uptick seen in March and April. Longer-term expectations remained anchored, with three-year and five-year outlooks steady at 2.4% and 2.1% respectively, the latter unchanged for seven consecutive months.
Household sentiment on spending also weakened. Expected nominal spending growth dropped to 3.2% in June, down from 3.5% in May and 3.7% in April. The continued decline suggests rising caution among consumers, likely driven by lingering geopolitical uncertainty, uneven wage growth, and lower perceived price pressures ahead.
On growth, expectations became slightly less negative. Median expectations for economic growth over the next 12 months improved to -1.0% from -1.1% in May and -1.9% in April. Still, households broadly expect economic contraction, reflecting the Eurozone’s fragile recovery and ongoing concerns around trade, manufacturing, and domestic demand.
