**Eurozone Consumers Report Lower Inflation Expectations and Mixed Economic Outlook**
The European Central Bank (ECB) released its Consumer Expectations Survey for June 2026 on Friday, revealing a notable decline in inflation expectations among Eurozone consumers, alongside a mixed outlook for income, spending, and economic growth.
According to the survey, median consumer perceptions of inflation over the past year fell to 3.6 percent in June, down from 4.0 percent in May. This downward trend continued with median expectations for inflation over the next year, which dropped to 3.0 percent from 3.5 percent in the previous month. Longer-term inflation expectations showed more stability, with projections for inflation three years ahead slightly decreasing to 2.8 percent from 2.9 percent, while five-year expectations remained unchanged at 2.4 percent.
The survey also indicated a decrease in uncertainty surrounding inflation expectations for the next 12 months, although levels of uncertainty still exceeded those recorded before the onset of the recent conflict in the Middle East. Notably, lower-income households reported higher perceived and expected inflation rates compared to their higher-income counterparts. Additionally, younger respondents aged 18 to 34 consistently indicated lower inflation figures than those in the older age brackets of 35 to 54 and 55 to 70.
In terms of income growth, consumers anticipated a slight increase in nominal income over the next year, with expectations rising to 1.1 percent from 1.0 percent in May. However, perceived nominal spending growth over the past year decreased to 5.1 percent from 5.4 percent, and expected nominal spending growth for the upcoming year also eased, falling to 3.6 percent from 3.8 percent. Households in the lower three income quintiles expected slightly higher spending increases than those in the top two quintiles.
Economic growth expectations for the next 12 months showed a less negative outlook, improving to -1.4 percent from -1.7 percent in May. The anticipated unemployment rate for the coming year also saw a marginal decline, dropping to 11.2 percent from 11.3 percent. Lower-income households continued to project the highest unemployment rates at 13.8 percent, while higher-income households expected a significantly lower rate of 9.7 percent. Overall, consumers’ expectations suggest that the future unemployment rate will remain only slightly above the current perceived level of 10.7 percent, indicating a broadly stable labor market outlook.
In the housing sector, consumers expected home prices to rise by 3.4 percent over the next year, a slight decrease from the 3.6 percent anticipated in May. Households in the lowest income quintile expected stronger house price growth at 3.7 percent, compared to 3.2 percent among those in the highest quintile. Expectations for mortgage interest rates over the next year increased slightly to 5.0 percent from 4.9 percent. Lower-income households anticipated higher mortgage rates at 5.8 percent, while higher-income households expected lower rates of 4.4 percent.
The survey also highlighted a decline in the net percentage of households reporting a tightening in access to credit over the past 12 months. Furthermore, the net share of households expecting tighter credit conditions over the coming year also decreased, suggesting a modest easing in credit expectations.
Overall, the ECB's latest survey reflects a cautious optimism among Eurozone consumers, with easing inflation expectations and a stable outlook for the labor market, despite ongoing challenges in income and spending growth.