ECB Survey Raises 2026 Inflation Forecast to 3.0% on Energy
Key Facts
Participants in the European Central Bank’s Survey of Professional Forecasters raised their estimate for euro zone headline inflation to 3.0% in 2026 and 2.6% in 2027, according to fourth-quarter results published by the bank. The revisions were increases of 0.3 percentage point for the 2026 forecast and 0.4 point for the 2027 forecast compared with the previous round. The 2028 inflation forecast remained unchanged at 2.0%. The bank attributed the revision to “higher energy commodity prices and their persistence for longer, and the resulting additional indirect effects.” The results follow the bank’s decision on October 29 to leave key interest rates unchanged.
Core inflation estimates show a calmer path in 2026, with the forecast unchanged at 2.4% from the previous round. But participants raised the 2027 forecast by 0.2 percentage point to 2.5% and increased the 2028 estimate by 0.1 point to 2.2%. These figures distinguish the effect of energy on headline inflation from the path of underlying prices in analysts’ forecasts. At the same time, the bank said participants included indirect effects from the energy shock of about 0.3 percentage point in both 2026 and 2027. It added that their expectations for subsequent effects, or what are known as second-round effects, remained limited.
The survey was conducted between October 2 and 7, 2026, and the bank received 52 responses. The results cover analysts’ forecasts for inflation, growth and unemployment, as well as their assessment of risks over the coming years. In their growth forecasts, participants put real GDP growth at 1.0% in 2026 and 1.3% in 2027. The bank said the improvement in growth estimates mainly reflected stronger-than-expected data for the first half of the year, along with resilient business confidence and spending on artificial intelligence. It said the growth forecast for 2028 and the long term was also 1.3%.
Participants expected the unemployment rate to decline gradually from about 6.4% in 2026 to 6.1% in the long term. In their risk assessment, inflation risks were tilted to the upside over 2026 to 2028, while remaining broadly balanced thereafter. Growth risks were tilted mainly to the downside. The survey linked these risks to geopolitical tensions and the possibility of disruptions to energy supplies. This places the elevated inflation forecasts in the fourth-quarter survey alongside modest growth estimates and risks that tend to weigh on activity.
The European Central Bank left all three key interest rates unchanged in its decision issued on October 29. The deposit facility rate stood at 2.50%, the main refinancing operations rate at 2.65%, and the marginal lending facility rate at 2.90%. At the news conference, ECB President Christine Lagarde said the energy shock was still unfolding. She added that “an increase in the size and duration of the energy shock is likely to push inflation higher and growth lower.” She also said higher energy prices had hurt consumer confidence.
The bank’s warning about energy coincided with annual energy-price inflation rising to 18.9% in September from 14.3% in August. Services inflation also increased to 3.2% in September from 3.0% the previous month. These data highlight two different trends among price components: a sharper acceleration in energy and a smaller increase in services. The bank’s Governing Council is due to hold its next monetary policy meeting in Frankfurt on December 16 and 17, 2026. A news conference will follow on the second day of the meeting.