Eurozone consumers' inflation expectations fall to 3.5%

Eurozone consumers have significantly lowered their near-term inflation expectations, according to a key survey released by the European Central Bank on Friday. The data for May shows median inflation expectations for the next 12 months fell to 3.5%, down from 4.0% in April, marking a notable shift in consumer sentiment.

While short-term expectations cooled, perceptions of inflation over the previous 12 months remained unchanged at 4.0%. Longer-term expectations held steady, with the three-year outlook at 2.9% and the five-year outlook at 2.4%, levels that remain close to the ECB's 2% medium-term target. The bank noted that uncertainty about inflation over the next year decreased but remains elevated compared to levels seen before the onset of conflict in the Middle East.

The survey, which polls 19,000 adults across 11 euro area nations, revealed persistent demographic divides. Respondents in lower-income brackets and older age groups consistently reported higher inflation perceptions and expectations than their higher-income and younger counterparts. This pattern is often attributed to a higher share of spending on essential goods, which are more sensitive to geopolitical...