European Central Bank survey puts December perceived inflation at 3.2% with higher three and five-year expectations

The European Central Bank published December results from its Consumer Expectations Survey, showing a slight increase in inflation perceptions and a modest rise in inflation expectations at the three and five-year horizons, while one-year inflation expectations were unchanged. The survey also points to lower expected nominal income growth, a less negative view of near-term economic growth, and slightly higher expectations for unemployment, home prices and mortgage rates. Median perceived inflation over the past 12 months rose to 3.2% from 3.1%, with median 12-month inflation expectations steady at 2.8%. Three-year inflation expectations increased to 2.6% from 2.5% and five-year expectations to 2.4% from 2.2%, while uncertainty around 12-month inflation expectations was unchanged. Expected nominal income growth over the next 12 months fell to 1.1% from 1.2% and expected spending growth remained at 3.4%; 12-month economic growth expectations improved to -1.1% from -1.3% and expected unemployment in 12 months edged up to 11.0% from 10.9%. Households expected home prices to rise 3.6% over the next 12 months (3.4% previously) and mortgage interest rates in 12 months to increase to 4.7% (4.6%), while the net share reporting a tightening in access to credit over the past year declined further and expectations for tighter credit conditions over the next year were unchanged since October. The ECB indicated that the next release of Consumer Expectations Survey results, covering January, is scheduled for 27 February 2026.