Inflation and Economic Growth Expectations Shift

In its January 2025 Consumer Expectations Survey, the European Central Bank (ECB) revealed a slight decrease in inflation expectations for the next 12 months, dropping to 2.6% from 2.8% in December 2024. This shift indicates a continued trend of inflation expectations staying below the perceived past inflation rate.

Stability in Three-Year Inflation Forecasts

Contrasting the one-year outlook, the three-year ahead inflation expectations remained steady at 2.4%. The ECB highlighted that uncertainty regarding inflation expectations over the next year has remained at its lowest since February 2022, marking six consecutive months of stability.

Consumer Outlook on Economic Growth and Unemployment

Consumer expectations for economic growth over the next 12 months have slightly improved, moving from negative 1.3% in December 2024 to negative 1.1% in January. Additionally, expectations for the unemployment rate one year ahead have decreased from 10.5% to 10.4%, signaling a modest optimism among consumers regarding the job market.