Inflation Expectations Dip Slightly

In its latest Consumer Expectations Survey for January 2025, the European Central Bank (ECB) announced that inflation expectations for the upcoming year have decreased to 2.6%, down from 2.8% in December 2024. This marks a notable shift in consumer outlook towards inflation.

Stable Long-Term Inflation Outlook

Despite the short-term fluctuations, the three-year ahead inflation expectations have remained steady at 2.4%. The ECB highlighted that both one-year and three-year inflation expectations are still below the perceived past inflation rate, indicating a cautious optimism among consumers.

Economic Growth and Unemployment Expectations

On a brighter note, consumer expectations for economic growth over the next 12 months have 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 slightly declined from 10.5% to 10.4%, suggesting a gradual recovery in the job market.