The Eurozone's median inflation expectations for the next 12 months held steady at 2.6% in February 2025, the same as in January, while expectations for inflation three years ahead also remained unchanged at 2.4%.
Eurozone consumer inflation expectations steady
In contrast, perceived inflation over the past 12 months was reported at 3.1%, indicating that consumers anticipate a moderation in inflation moving forward. The level of uncertainty regarding inflation expectations for the next 12 months saw a slight decrease, reaching its lowest point since January 2022, suggesting a growing sense of stability in inflation forecasts.
Notably, younger respondents (aged 18-34) consistently reported lower inflation perceptions and expectations compared to older age groups (35-54 and 55-70). This generational divide could reflect differing experiences with economic conditions and inflationary pressures. In terms of income growth, consumers' expectations for nominal income growth over the next 12 months increased slightly, rising to 1% in February, up from 0.9% in January, signaling a mild improvement in income optimism.
Economic growth expectations turn negative
On the other hand, economic growth expectations for the next 12 months turned slightly more negative, with a forecast of -1.2%, compared to -1.1% in the previous month, reflecting concerns over the economic outlook. Additionally, expectations for the unemployment rate edged up to 10.5%, from 10.4% in January, highlighting ongoing worries about job market conditions and the potential for higher unemployment in the coming year. These mixed expectations suggest a cautious outlook, with some hope for income growth but continued concerns about broader economic and labor market conditions.
