ECB Survey Shows Rising Inflation Expectations in August
The European Central Bank's monthly survey indicates consumer inflation expectations increased across all time horizons in August, while perceptions of
Euro area consumers expect higher inflation in the coming years, according to the latest European Central Bank survey. The ECB's Consumer Expectations Survey for August 2026 shows median inflation expectations rose across all measured horizons.
Inflation Perceptions and Expectations
In August, the median perceived inflation rate over the previous 12 months remained at 3.5%. Expectations for future inflation, however, edged upward. The median expectation for inflation one year ahead increased to 3.0% from 2.9% in July. The three-year ahead expectation rose to 2.9% from 2.7%, and the five-year ahead expectation increased to 2.5% from 2.4%.
Uncertainty surrounding these one-year expectations decreased but stayed above levels seen before the onset of conflict in the Middle East. The survey continued to reveal a disparity based on income and age. Respondents in the bottom 20% of earners reported higher average inflation perceptions and expectations than those in the top 20%. Younger consumers, aged 18 to 34, reported lower figures than older age groups.
Income, Spending, and the Economy
Expectations for nominal income growth over the next year were unchanged at 1.0%. As in prior months, the bottom income quintile expected higher income growth (1.7%) than the top quintile (0.7%). Perceived spending growth over the past year increased slightly to 5.2%, while expected spending growth for the next year held steady at 3.6%.
Economic growth expectations for the next 12 months remained at -1.2%. The expected unemployment rate in one year's time, however, decreased to 11.0% from 11.2% in July. Households in the lowest income bracket expected the highest future unemployment rate at 13.4%, while those in the highest bracket expected the lowest at 9.4%. Consumers expect the future jobless rate to be only slightly above the perceived current rate of 10.5%.
Housing Market and Credit Conditions
Expectations for home price growth over the next 12 months were unchanged at 3.4%. Again, expectations varied by income, with the lowest quintile anticipating 4.0% growth and the highest quintile expecting 3.2%. Expectations for mortgage interest rates in 12 months were also steady, at 4.9%. The top income quintile expected the lowest future rate at 4.4%, and the bottom quintile expected the highest at 5.7%.
The survey indicated some easing in credit conditions. The net percentage of households reporting tighter access to credit over the past year declined compared to July. The net percentage expecting tighter conditions over the next year also fell. The ECB notes that the survey results, based on responses from around 19,000 adults across 11 euro area countries, do not represent the views of its own decision-making bodies. The next set of results is scheduled for release on 23 October 2026.
