Consumers Raise Eurozone Inflation Expectations Above ECB Target

Euro-area consumers raised their inflation expectations in August 2026, anticipating 3.0% inflation over the next year, 2.9% over three years and 2.5% over five years, up from July across all horizons and above the European Central Bank’s 2% target. Perceptions of inflation over the previous year remained unchanged at 3.5%, while uncertainty about near-term expectations eased but remained above pre-conflict levels. Expected nominal income growth held steady at 1.0%, compared with anticipated spending growth of 3.6%, suggesting households do not expect their purchasing power to improve. Consumers continued to foresee a 1.2% contraction in economic activity, although their expected unemployment rate edged down to 11.0% from 11.2%. Lower-income households reported higher inflation and income-growth expectations than higher-income households, while younger consumers maintained more moderate inflation expectations than older respondents.