Euro area's short-term inflation expectations up in August

ISTANBUL

The eurozone's short-term inflation expectations increased to 2.8% in August, from 2.6% in July, according to results of the European Central Bank (ECB)'s consumer survey released on Friday.

"Uncertainty about inflation expectations over the next 12 months increased slightly in August. Respondents in lower income quintiles continued to report on average slightly higher inflation perceptions and short-horizon expectations than those in higher income quintiles, a trend observed since 2023," a central bank statement said.

However, the broad evolution of inflation perceptions and expectations remained relatively closely aligned across income groups. Younger respondents to the survey (aged 18-34) continued to report lower inflation perceptions and expectations than older respondents (aged 35-54 and 55-70), though to a lesser degree than in previous years, according to the statement.

On the other hand, the consumers' inflation expectations for the next three years remained stable at 2.5%.

Meanwhile, consumers in the euro area expected an economic growth of minus 1.2% for the next 12 months.

The ECB's Consumer Expectations Survey is published monthly. It is conducted by interviewing approximately 19,000 people from Belgium, Germany, Ireland, Greece, Spain, France, Italy, the Netherlands, Austria, Portugal and Finland.

Inflation expectations play a key role in the ECB's monetary policy. The inflation outlook will determine how far and at what pace the ECB will raise or lower interest rates.

The annual inflation in the euro area ticked up to 2.1% in August, from 2% in July. The ECB's medium-term inflation target is 2%.