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- October 17, 202613°
- BIST10011,722-2.89%
- USD49.45+0.05%
- EUR55.62+0.37%
- GOLD4,181.10+0.26%
- INTEREST37.00%-1.00
- BITCOIN81,509+0.01%
- October 17, 202613°
Oil shock lifts five-year inflation expectations in the euro area
Consumers’ inflation expectations for the next 12 months in the euro area rose to 3% in August. The oil shock also pushed up expectations for three- and five-year horizons as fuel and heating costs were expected to increase.
The oil shock’s impact on fuel and heating costs pushed up consumers’ inflation expectations in the euro area over both three- and five-year horizons. The European Central Bank published the results of its August consumer survey, conducted among around 19,000 adults in 11 euro area countries.
According to the survey, average inflation expectations for the next 12 months rose to 3% from 2.9% in July. Expectations for three years ahead increased from 2.7% to 2.9%, while expectations for five years ahead rose from 2.4% to 2.5%.
Oil prices affected expectations
The survey results showed that the oil shock triggered by conflicts centered in the Middle East, along with the sharp rise in fuel and heating costs, contributed to the increase in inflation expectations.
Perceived inflation over the previous 12 months remained at 3.5% in August. Uncertainty surrounding expectations for the next 12 months declined slightly, but remained elevated compared with the period before the conflicts in the Middle East began.
Inflation perceptions and expectations among participants in the lowest-income group were higher than those of participants in the highest-income group. Expectations among participants aged 18 to 34 were lower than those of older age groups.
Inflation remains above the ECB’s target
Inflation in the euro area reached 3.2% in August, continuing to exceed the European Central Bank’s medium-term target of 2%.
On September 10, the European Central Bank raised its deposit rate by 25 basis points to 2.50% to combat inflationary pressures. The move marked the bank’s second interest-rate hike of the year.
Despite the risk of weighing on economic growth, tight monetary policy measures are expected to continue in the coming months until inflation is brought under control.
Growth and unemployment forecasts
Consumers’ expectations for economic growth over the next 12 months remained unchanged at minus 1.2%. Expectations for the unemployment rate over the same period fell to 11% from 11.2% in July.
Households in the lowest-income group recorded the highest expectations for unemployment 12 months ahead, at 13.4%. The figure was 9.4% among households in the highest-income group.
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