FRANKFURT, Nov 11 (Businesshala) – Euro zone consumers expect prices across the bloc to rise 3% over the next 12 months before falling back to the European Central Bank’s 2% target, an ECB survey showed on Thursday.
Euro area inflation reached 4.1% in October and economists are beginning to warn it could remain above the ECB’s target for next year as higher energy costs and supply disruptions feed into wage and price expectations.
The poll results may reinforce the ECB’s belief that the current rise in the cost of living is temporary as families are unwilling to continue it beyond next year.
The average respondent to the ECB’s consumer expectation survey saw annual price increases of 3% for the coming 12 months and 2% per year for the next three years.
“Large households overall are very aware of the fact that inflation has increased in the near term to upgrade their one-year forward beliefs,” Chief Economist Philip Lane said in unveiling the survey results.
“But they are not changing, at least in terms of the median, three-year confidence. This suggests that at least the average respondents agree that this inflationary increase is likely to be temporary in nature.
The survey also revealed that households did not see this period of inflation coming.
The October 2020 poll put one-year and three-year forward inflation at 2%, where they have generally been hovering since the survey began in April 2020.
This confirmed that households are poor at predicting inflation, a long-known fact in the economic profession.
But it also showed that the ECB managed to pin their hopes around their official target, which could give ammunition to policy hawks who want to wind down the ECB’s bond-buying programs.
The ECB interviewed nearly 10,000 consumers in Germany, France, Italy, Spain, the Netherlands and Belgium using an online poll.
The survey has been conducted monthly but this is the first time some of the results have been made public. (Reporting by Francesco Canepa; Editing by Jan Harvey)