European Inflation Expectations Rise to 3.0% in August as Three- and Five-Year Outlooks Increase
Key Facts
The average euro area consumer expectation for inflation over the next twelve months rose to 3.0% in August, from 2.9% in July, according to the European Central Bank survey published on 18 September. The reading points to a monthly increase in households’ price estimates, alongside higher expectations over longer horizons. Three-year inflation expectations rose to 2.9% from 2.7%, and five-year expectations to 2.5% from 2.4%. These figures relate to the August survey wave and do not represent the results of the September survey. The bank also said the survey results do not reflect the views of its decision-making bodies or staff.
The longer-term reading stands out as the highest since the survey began collecting data in late 2022, with five-year inflation expectations at 2.5% in August. The account of the September meeting said most measures of longer-term inflation expectations remained broadly stable at around 2%. The survey also showed that inflation consumers said they had experienced over the previous twelve months held at 3.5% in August, unchanged from July. These indicators distinguish households’ outlook for future prices from their experience over the past period, and from the euro area’s actual inflation measure. In a flash estimate cited by the bank’s account from Eurostat, headline inflation was 3.3% in August, compared with 2.9% in July.
The bank’s account linked the rise in headline inflation in August, likely, to a strong contribution from liquid fuel refining margins and an increase in energy goods prices. The bank said the rise in households’ short-term expectations was consistent with higher energy prices. By contrast, consumers’ expectations for economic growth over the next twelve months held at -1.2% in August. Their expectations for the unemployment rate in 12 months fell to 11.0% from 11.2% in July. These figures place price expectations alongside households’ outlook for growth and unemployment, without in themselves providing a guaranteed path for inflation or an interest rate decision.
Spending details showed consumers expected nominal spending to grow 3.6% over the next twelve months, unchanged from July. Their perceived nominal spending growth over the previous twelve months rose to 5.2% in August from 5.1% in July. For housing, respondents expected their house prices to rise 3.4% over the next year, while their expectations for mortgage rates in 12 months held at 4.9%. These indicators provide an additional picture of households’ estimates for living costs, financing and spending, alongside inflation expectations. The bank conducted the online survey among about 19,000 adult consumers from 11 euro area countries, and the fieldwork period for the August wave ran from 6 to 24 August 2026.
On monetary policy, the account of the Governing Council meeting held on 9 and 10 September said the council raised the deposit facility rate from 2.25% to 2.50%, an increase of 25 basis points. The bank reaffirmed that its decisions are data-dependent and taken meeting by meeting, with no advance commitment to a particular interest rate path. This follows headline inflation of 3.3% in August, according to the flash estimate cited in the account, with part of the increase likely attributed to energy and fuel refining margins. The council is scheduled to hold its next monetary policy meeting in Frankfurt on 28 and 29 October, followed by a press conference on 29 October after the second day’s meeting. The August reading remains the latest consumer expectations survey result confirmed in the evidence available here.