User's anticipations for mid-term inflation seem to have decreased
According to a survey conducted by the European Central Bank (ECB), long-term inflation forecasts among Eurozone consumers have seen a decrease. Specifically, the average (median) consumer anticipates inflation at 2.4% over a 12-month period in September, which is a decrease from the 2.7% forecasted in August. For a three-year outlook, consumers expect inflation to be 2.1% in September, as opposed to the 2.3% predicted in August.
The ECB gathers valuable insights into the inflation landscape within the currency union through the collection of monthly consumer inflation expectations data. Over 19,000 consumers from eleven Eurozone countries, including Germany, France, and Italy, participate in this survey.
Although the German inflation rate dropped to 1.8% in September, as per European standards, it's predicted to escalate prior to the year's end. The Deutsche Bundesbank has not yet given its complete approval of inflation recovery. The Bundesbank recently stated, "Inflation rates are likely to rebound in the upcoming months. This can be partly attributed to base effects in energy, as oil prices peaked in September of the last year before subsequently declining, potentially driving inflation."
The expectation for higher inflation rates also extends to food items, as increased commodity prices have led to an uptick in food-related price increases. Additionally, inflation within the service sector is projected to remain persistently high, with disinflation progressing at a slower pace compared to industrial goods, given the surge in wage levels.
The ECB survey findings reveal that despite the drop in German inflation, Eurozone consumers still anticipate an increase in inflation rates before the end of the year. The survey further indicates that consumers expect higher inflation rates not only in energy but also in food items and the service sector.
