Consumers lower inflation expectations to 2.9 percent
Euro area consumers trimmed their median 12-month inflation expectations to 2.9 percent in July from 3.0 percent in June. The European Central Bank's monthly survey showed perceived past inflation also eased to 3.5 percent alongside falling mortgage rate expectations.
Slight easing across key horizons
Median inflation expectations over the next 12 months decreased to 2.9 percent in July from 3.0 percent in June, while three-year expectations fell to 2.7 percent from 2.8 percent.
Perceptions of inflation over the past year dropped to 3.5 percent from 3.6 percent, according to the European Central Bank.
Five-year inflation expectations remained unchanged at 2.4 percent.
Nominal income growth expectations for the year ahead edged down to 1.0 percent from 1.1 percent, whereas expected nominal spending growth held steady at 3.6 percent.
Lower-income quintiles and respondents aged 35 to 70 continued to register higher inflation expectations than higher-income households and younger cohorts aged 18 to 34.
Softening jobs sentiment alongside cheaper credit
Economic growth expectations for the next 12 months improved slightly to -1.2 percent from -1.4 percent, while expected unemployment remained unchanged at 11.2 percent.
However, quarterly indicators pointed to softening labour sentiment: the expected probability of finding a job within three months fell to 30.8 percent from 32.1 percent in April, and job loss fears rose to 9.8 percent.
Mortgage rate expectations over 12 months declined to 4.9 percent from 5.0 percent, with home price growth steady at 3.4 percent.
Fragile household resilience
The marginal decline in inflation expectations provides welcome reassurance for central bankers tracking disinflation.
However, expected income growth of just 1.0 percent fails to keep pace with living costs, threatening consumption.
Subtle cracks in employment sentiment further underline that household resilience remains fragile.