ECB Survey Raises Inflation Forecasts to 3.0% in 2026 and 2.6% in 2027

Key Facts

Participants in the European Central Bank’s Survey of Professional Forecasters raised their forecasts for annual euro area inflation to 3.0% in 2026 and 2.6% in 2027, compared with their third-quarter estimates, according to fourth-quarter results published by the bank on 30 October 2026. The figures represent increases of 0.3 percentage points for the 2026 forecast and 0.4 points for the 2027 forecast, while the 2028 estimate remained at 2.0%. The bank said higher energy prices and their indirect effects were the main reason for the upward revisions. The results follow the bank’s decision on 29 October to leave all three key interest rates unchanged. The survey reflects the expectations of participating forecasters, while the bank said its results do not represent the views of its decision-making bodies or staff.

For core inflation, which excludes energy and food, participants forecast a rise of 2.4% in 2026 and 2.5% in 2027. They revised their 2027 estimate up by 0.2 percentage points from the previous survey, while the 2026 estimate was unchanged. This path remains below the 2.6% forecast for headline inflation in 2027, reflecting the impact of the energy component. The bank said participants expect most of the additional effects of the energy shock to emerge in 2027, with second-round effects remaining limited. Longer-term expectations remained at 2.0% for both headline and core inflation in 2031.

The results place forecasters’ expectations alongside the bank’s earlier projections: the ECB staff projections issued in September showed headline inflation averaging 3.0% in 2026, then 2.5% in 2027 and 2.1% in 2028. In the September Consumer Expectations Survey, the median expectation for inflation over the next twelve months rose to 3.1% from 3.0% in August. Consumers’ expectations for three years remained at 2.9% and for five years at 2.5%. These measures show that the Survey of Professional Forecasters is not the only gauge of euro area price expectations, and that its horizons and methodology differ from those of the consumer survey and the bank’s staff projections.

The revision to price expectations came alongside improved growth estimates from participants: they raised their forecast for real gross domestic product growth in 2026 to 1.0%, an increase of 0.4 percentage points from the previous survey. They forecast growth of 1.3% in both 2027 and 2028. In the labour market, they expected the unemployment rate to reach 6.4% in 2026, before gradually falling to 6.1% over the longer term. But the bank said in its monetary policy statement that a larger and longer-lasting energy shock could raise inflation and lower growth, and that tighter financing conditions since the previous meeting were likely to weigh on both. The picture therefore combines participants’ higher growth forecasts with the bank’s warning that the energy shock could weaken economic activity.

On 29 October, the bank kept the deposit facility rate at 2.50%, the main refinancing operations rate at 2.65%, and the marginal lending facility rate at 2.90%. It said higher energy prices pose upside risks to inflation and downside risks to growth. The Governing Council said policy decisions would depend on incoming data and be made meeting by meeting, adding: "The Council is not pre-committing to a particular rate path." The euro fell after the statement, according to Reuters, despite the bank’s warning about energy-related inflation risks. The forecasters’ survey does not set an official rate path, while the bank kept its future decisions tied to its assessment of the data.

The survey was conducted between 2 and 7 October, and the bank received 52 responses. The bank said the results do not represent the views of policymakers or staff, placing the figures within the context of the survey participants’ expectations. Among upcoming data releases, the bank’s calendar lists a flash estimate of seasonally adjusted euro area harmonised inflation for October on 4 November 2026, with the full release due on 18 November. The bank also announced that its next Eurosystem staff macroeconomic projections would be published on 18 December 2026. These dates will provide subsequent data against which to compare the path of prices and growth with the expectations shown in the survey.