Euro Zone Consumers Adjust Inflation Expectations

FRANKFURT (Reuters) – Euro zone consumers have trimmed their inflation expectations for the next 12 months to the lowest level in three years, according to a European Central Bank (ECB) poll released on Friday, indicating that the ECB is nearing success in controlling prices.

The Consumer Expectations Survey assesses households' confidence in the ECB’s ability to achieve its 2% inflation target, which can influence consumer behavior regarding spending, saving, and wage demands.

In the August survey, the median respondent anticipated a 2.7% increase in prices over the next 12 months, marking the slowest growth expectation since September 2021, down from 2.8% in July.

Consumers also lowered their inflation expectations for three years ahead, from 2.4% to 2.3%, the lowest rate since June.

Earlier this month, the ECB cut borrowing costs for the second time following June's reduction, in response to weaker growth forecasts and expectations of a gradual decrease in inflation in the coming year.

Furthermore, more dovish policymakers at the euro zone central bank are pushing for another rate cut in October due to disappointing economic data, though this proposal may face opposition from hawkish members, sources told Reuters.