Euro area sees drop in perceived inflation in April 2023: ECB survey

The uncertainty surrounding inflation expectations for the coming year also declined. The March increases have been largely offset, with inflation expectations remaining well below the perceived past rate. Younger respondents (18-34 years) reported lower inflation perceptions and expectations, along with more considerable declines compared to older respondents (55-70 years).

Euro area’ perceived inflation dropped to 8.9% in April 2023, with expectations for future inflation also declining, as per an ECP survey.
Consumers predicted slower income growth.
Economic growth outlook was less negative, and unemployment rate expectations decreased.
Euro area’s job prospects for both employed and unemployed respondents declined.

In terms of income and consumption, consumers predicted a slower rise in their nominal income over the next year, anticipating a 1.1 per cent increase compared with 1.3 per cent in March. This expected income growth decrease was most noticeable in the first four income quintiles, while expectations remained unchanged in the highest income quintile. Nominal spending growth perceptions remained stable at 7.0 per cent. Anticipated nominal spending growth over the coming year fell to 3.8 per cent in April, from 4.1 per cent in March, according to the ECB Consumer Expectations Survey.

On the economic growth front, expectations for the next year were less negative, standing at minus 0.8 per cent in April compared to minus 1 per cent in March. Mirroring the economic growth outlook, expectations for the unemployment rate a year ahead decreased to 11.2 per cent, from 11.7 per cent in March. Although consumers expect the future unemployment rate to exceed the current rate of 11 per cent, the gap has narrowed somewhat.

Furthermore, the quarterly data in April 2023 revealed a decrease in job prospects for both the employed and unemployed. Unemployed respondents reported a decline in their expected probability of finding a job over the next three months to 26.6 per cent, from 28.1 per cent in January 2023. Conversely, the employed respondents reported their expected probability of losing their job over the next three months had decreased to 7.8 per cent in April, from 8.1 per cent in January.

Fibre2Fashion News Desk (DP)