Consumers in the euro area expect inflation to run at around 5 percent over the next twelve months, according to a November report issued by the European Central Bank. The forecast is a slight downgrade from 5.4 percent, a revision that follows the October release. The ECB notes that the pullback reflects evolving price dynamics and shifting expectations that households are factoring in as supply chains normalize and energy costs stabilize to some extent.
Looking further ahead, the five year horizon points to inflation averaging about 2.9 percent for the next three years. This is just above the ECB target of 2 percent and indicates that price growth is anticipated to ease, yet remain above target for an extended period as the economy absorbs post pandemic adjustments and energy market realignments.
In November, households reported a current inflation rate perceived at around 9.9 percent for the month, a figure that matches the October perception and reflects the persistent gap between actual price movements and consumer experience at the point of purchase.
The euro area previously logged a peak level of inflation around 10 percent in recent months, underscoring the severity of recent price pressures and the challenge of bringing inflation back to target levels without slowing economic activity.
Uncertainty about inflation in the coming months has remained steady since midyear, even as actual price changes have shown signs of stabilization. The persistence of higher inflation compares with Ukraine’s prewar levels, highlighting how global commodity markets and domestic demand interact in setting price paths across the region.
The ECB also highlights that younger consumers, specifically those aged 18 to 34, tend to report lower inflation perceptions than older cohorts, such as respondents aged 55 to 70. This divergence presents an important dimension for policy makers as different age groups experience price changes through goods and services they buy most frequently.
The Eurostat survey is conducted online, with participation from about 14,000 adults across Belgium, Germany, Spain, France, Italy, and the Netherlands. The goal is to capture a broad set of expectations about future price movements, current inflation experiences, and the perceived impact of ongoing economic developments on household budgets. The results help central bankers gauge whether inflation expectations are anchored and how they might evolve with changes in energy costs, consumer demand, and monetary policy signals.
Overall, the November readings indicate that while the path toward the ECB’s 2 percent objective remains constrained by past price gains and energy market volatility, households remain cautiously optimistic that inflation will trend lower in the medium term. Policy makers will continue to monitor price momentum, wage dynamics, and the longer horizon expectations that influence consumer behavior and economic growth across Canada and the United States as well. Enduring price pressures, shifts in energy markets, and global supply chain adjustments will shape the trajectory of inflation in the euro area and beyond, requiring careful calibration of monetary policy to support sustainable growth while steering inflation back toward target levels.
Citations: European Central Bank report on consumer inflation expectations and perceived inflation in the euro area.