ECB survey shows mixed consumer expectations in October

On Friday, the European Central Bank (ECB) released the results of its Consumer Expectations Survey for October 2024, revealing a nuanced picture of consumer sentiment across the euro area. The survey indicated a decrease in median consumer inflation perceptions over the past year, with a decline to 3.2% from 3.4% in September. This marks a significant drop from the peak of 8.4% in September 2023. However, expectations for inflation over the next year edged up slightly to 2.5%, from 2.4%. Expectations for inflation three years ahead remained stable at 2.1%, the lowest since the onset of the Russia-Ukraine conflict in February 2022.

In terms of income and consumption, the survey showed a decrease in consumer expectations for nominal income growth, down to 1.1% from 1.3% in September. Despite a decrease in perceptions of nominal spending growth over the past year, expectations for spending growth in the coming year rose to 3.3% from 3.2%. Economic growth expectations for the next year worsened, with consumers projecting a -1.1% growth compared to -0.9% in September. On a more positive note, the expected unemployment rate for the next year saw a slight decline to 10.4% from 10.6%.

The housing market expectations remained relatively stable, with consumers anticipating a 2.8% increase in home prices over the next year, consistent with the previous month’s expectations. Mortgage interest rate expectations for the coming year fell to 4.6%, the lowest since August 2022 and a decrease from the peak in November 2023. The survey also noted disparities between income quintiles, with lower-income households expecting higher mortgage rates compared to higher-income households.

The ECB also announced the release of additional microdata from two annual topical modules, which will enhance research capabilities with the Consumer Expectations Survey data. These modules cover consumer finance and housing situations, with further modules on labor market experiences and central bank-related topics set for release in 2025. The next set of CES results is scheduled to be published on January 7, 2025.

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