ECB releases January Consumer Expectations Survey: Consumers expect higher inflation

The European Central Bank (ECB) has released the results of its Consumer Expectations Survey for January 2024. The ECB's Consumer Expectations Survey is published monthly. The survey is conducted by interviewing approximately 14 thousand people from Germany, France, Italy, Spain, the Netherlands, and Belgium, which represent approximately 85 percent of the Eurozone's GDP.

According to the survey, the average inflation expectation of consumers in the Eurozone for the next 12 months rose from 3.2 percent to 3.3 percent.

Consumers' inflation expectation for the next 3 years remained at 2.5 percent, the same as in December 2023. It was noted that both expectations remain above the ECB's 2 percent inflation target.

CONSUMER EXPECTATIONS IMPROVED

While consumers' expectations regarding economic growth in the region improved compared to the previous month, the expectation for economic growth over the next 12 months, which was minus 1.3 percent in December 2023, fell to minus 1.1 percent in January.

Consumers expect unemployment to be 10.9 percent on average over the next 12 months, whereas the expectation in December 2023 was 11.2 percent. 

According to data from the European Statistical Office (Eurostat), annual inflation in the Eurozone fell from 2.9 percent in December to 2.8 percent in January. Furthermore, the ECB had raised interest rates by a total of 450 basis points in 10 consecutive meetings since July 2022.

Continuing its interest rate hikes last year, the ECB did not make any changes in its October, December, and January 2024 meetings after raising the refinancing rate to 4.50 percent at its September 2023 meeting.

ECB officials had stated that they would keep interest rates at sufficiently restrictive levels for as long as necessary to bring inflation back to the 2 percent target in a timely manner.