Euro-zone consumers’ price expectations have fallen to the lowest since 2020, according to a European Commission index that may comfort policymakers trying to bring inflation under control.
The measure dropped to 12.2 in May from 15 the prior month. Part of the long-running economic sentiment survey run by Brussels officials, it reflects responses from consumers on how prices will develop over the coming year.
The report released on Tuesday also showed that expectations on what businesses can charge in the next three months are also falling. Price gauges for manufacturing, services, construction and retail all declined further, while the overall measure of economic sentiment dropped to a six-month low.
For European Central Bank officials in Frankfurt, such numbers will provide some reassurance that the inflation surge seen as part of a once-in-a-generation cost-of-living-shock isn’t getting entrenched in the economy. In their effort to tame prices, policymakers have signaled as many as three further interest-rate increases to come.
The report coincides with a big week in assessing euro-zone inflation, with the latest readings due on Thursday seen likely to show limited progress in bringing the headline measure toward the ECB’s 2% target. An outcome of 6.3% is forecast by economists, according to the median prediction.
The first national number of the week, from Spain, was more encouraging. Inflation there slowed in May to 2.9%, the least since July 2021. Data will be released in France, Italy and Germany on Wednesday.
