Eurozone consumers' short-term inflation expectations fall in May

Eurozone consumers' inflation expectations for the next 12 months fell sharply in May, while medium- and long-term expectations remained stable, the European Central Bank (ECB) said on Friday.

According to the ECB's Consumer Expectations Survey for May 2026, median inflation expectations for the next 12 months declined to 3.5% from 4% in April.

Median inflation expectations for three years ahead remained unchanged at 2.9%, while expectations for five years ahead were steady at 2.4%.

Consumers' perceptions of inflation over the previous 12 months remained unchanged at 4%.

The ECB said uncertainty about inflation expectations for the next 12 months decreased but remained above levels recorded before the start of the war in the Middle East.

According to the survey, respondents in lower-income groups continued to report higher inflation perceptions and expectations than those in higher-income groups, while younger respondents reported lower inflation perceptions and expectations than older consumers.

Consumers' nominal income growth expectations for the next 12 months rose to 1% from 0.8% in April.

Perceived nominal spending growth over the previous 12 months edged up to 5.4% from 5.3%, while expected spending growth over the next 12 months fell to 3.8% from 4.3%.

Economic growth expectations for the next 12 months became less negative, improving to minus 1.7% from minus 2.2% in April.

However, consumers' expectations for the unemployment rate 12 months ahead rose slightly to 11.3% from 11.2%.

The perceived current unemployment rate stood at 10.7%, suggesting consumers continued to expect the labor market to remain broadly stable but slightly weaker over the coming year.

In the housing market, consumers expected home prices to rise 3.6% over the next 12 months, compared with 3.7% in April.

Expectations for mortgage interest rates over the next 12 months remained unchanged at 4.9%.

The ECB also said the net share of households reporting tighter access to credit over the previous 12 months increased further in May, reaching its highest level since February 2024.