The rate of perceived inflation over the previous twelve months stood at 9.9 per cent for the third consecutive month in December 2022.

Inflation expectations remained well below the perceived past inflation rate, particularly at the medium-term horizon of three years, as per the Consumer Expectations Survey by ECB.

Uncertainty about inflation expectations 12 months ahead eased somewhat compared with the levels observed since mid-2022. Inflation perceptions and expectations were closely aligned across income groups, but younger respondents (aged 18-34) continued to report lower inflation perceptions and expectations than older respondents (aged 55-70).

In December 2022, consumers expected their nominal income to grow by 1 per cent over the next 12 months, up from 0.9 per cent in November. Perceptions of nominal spending growth over the previous 12 months also edged up to 6.4 per cent. Expectations for nominal spending growth over the next 12 months declined further, edging down from 4.3 per cent to 4.2 per cent. Expectations for nominal spending remained broadly aligned across income groups, with younger respondents (aged 18-34) still reporting lower expectations for nominal spending than older respondents (aged 55-70).

Economic growth expectations for the next 12 months continued to increase noticeably, moving up from minus 2 per cent in November to minus 1.5 per cent in December. In line with the higher expectations for economic growth, expectations for the unemployment rate 12 months ahead declined markedly to 11.9 per cent, compared with 12.4 per cent in November. Consumers continued to expect the future unemployment rate to be higher than the perceived current unemployment rate (11.6 per cent). The lowest income quintile reported the highest expected and perceived unemployment rates.

Fibre2Fashion News Desk (DP)