ECB survey reveals mixed consumer expectations in December
The European Central Bank's Consumer Expectations Survey for December 2025 indicates mixed trends, with rising inflation perceptions and longer-term expectations, but decreasing nominal income growth expectations and a higher expected unemployment rate.
Inflation expectations diverge
Consumer perceptions of inflation over the past 12 months rose slightly to 3.2 percent in December, up from 3.1 percent in November.
Longer-term inflation expectations also increased, with the median expectation for three years ahead rising to 2.6 percent from 2.5 percent, and five years ahead to 2.4 percent from 2.2 percent.
However, median expectations for inflation over the next 12 months remained unchanged at 2.8 percent.
The survey noted that lower income quintiles continued to report slightly higher inflation perceptions and short-horizon expectations compared to higher income groups, a trend observed since 2023. Younger respondents also reported lower inflation perceptions and expectations than older age groups.
Income falls, unemployment rises
Expectations for nominal income growth over the next 12 months decreased to 1.1 percent in December from 1.2 percent.
Spending growth expectations, however, remained unchanged at 3.4 percent, reflecting divergent trends across income quintiles.
Economic growth expectations for the next 12 months became less negative, improving to -1.1 percent from -1.3 percent.
Despite this, the expected unemployment rate 12 months ahead increased to 11.0 percent from 10.9 percent.
Consumers also anticipated higher home price growth, rising to 3.6 percent from 3.4 percent, and an increase in mortgage interest rates to 4.7 percent from 4.6 percent.