Consumer inflation expectations rise across all horizons
Euro area consumers raised their inflation expectations across short- and long-term horizons in August 2026, while income growth projections stayed at 1.0 percent. The monthly Consumer Expectations Survey showed one-year inflation expectations climbing to 3.0 percent.
Inflation expectations tick higher across horizons
Median inflation expectations for the next 12 months increased to 3.0 percent in August from 2.9 percent in July.
Longer-term horizons also shifted upward, with three-year expectations rising to 2.9 percent from 2.7 percent and five-year expectations reaching 2.5 percent from 2.4 percent.
In contrast, perceived past inflation over the previous 12 months remained unchanged at 3.5 percent.
Inflation uncertainty fell slightly on the month but remained above levels recorded prior to the Middle East conflict.
Bottom-income households and older respondents aged 35 to 70 continued to register higher inflation expectations than higher earners and younger cohorts.
Subdued growth amid credit easing
Expected nominal income growth remained flat at 1.0 percent, lagging expected nominal spending growth of 3.6 percent.
Economic growth expectations held steady at -1.2 percent over the next 12 months, while expected unemployment edged down to 11.0 percent from 11.2 percent in July.
Home price growth expectations were unchanged at 3.4 percent, alongside flat mortgage rate projections of 4.9 percent.
Meanwhile, net perceived and expected credit tightening continued to decline.
Sentiment refuses to anchor
The uptick across all horizons shows that consumer inflation expectations remain stubborn despite headline disinflation.
With five-year projections rising to 2.5 percent, household sentiment continues to drift above official targets.
This persistent gap prevents policymakers from assuming that inflation psychology is fully anchored.