The median rate of perceived inflation over the previous 12 months in the European Union (EU) decreased noticeably to 7 per cent in November last year from 7.8 per cent in October, according to the European Central Bank (ECB) consumer expectations survey.

Median expectations for inflation over the next 12 months also declined, to 3.2 per cent in November from 4 per cent in October, as did those for inflation three years ahead, to 2.2 per cent from 2.5 per cent.

Inflation expectations, both at the one-year and three-year horizons, declined to their lowest levels since February 2022, well below the perceived past inflation rate.

Uncertainty about inflation expectations over the next 12 months declined slightly.

Consumers in the November survey expected their nominal income over the next 12 months to grow by 1.2 per cent, which was a slightly higher rate than October’s 1.1 per cent.

This increase was driven by the expectations of consumers aged 35-54, while the expectations of younger consumers (aged 18-34) remained stable and those of older consumers (aged 55-70) decreased slightly.

Perceptions of nominal spending growth over the previous 12 months remained stable at 6.3 per cent. Expectations for nominal spending growth over the next 12 months decreased further in November last year to 3.2 per cent, from 3.3 per cent in October and 3.4 per cent in September. This decrease was broad-based across income quintiles and age groups.

Economic growth expectations for the next 12 months were marginally less negative, standing at minus 1.2 per cent in November, compared with minus 1.3 per cent in October. Expectations for the unemployment rate 12 months ahead decreased to 11.1 per cent from 11.4 per cent in October.

Consumers continued to expect the future unemployment rate to be only slightly higher than the perceived current unemployment rate (10.7 per cent), implying a broadly stable labour market.

Fibre2Fashion News Desk (DS)

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