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Long-term inflation expectations of consumers: an overview

Author

Listed:
  • Baptista, Pedro
  • Bates, Colm
  • Kouvavas, Omiros
  • Meyer, Justus
  • Werkmeister, Katia

Abstract

This box explores the newly available five-year-ahead inflation expectations collected in the ECB Consumer Expectations Survey (CES). While consumers’ beliefs about longer-term inflation expectations are characterised by substantial heterogeneity and dispersion, the median five-year-ahead expectations have been close to the ECB's 2% inflation target since September 2024. This relative stability contrasts with more variable one-year and three-year expectations, which have been more sensitive to actual changes in inflation. More recent CES data also suggest an increasing concentration of five-year expectations consistent with the ECB’s target, indicating stronger consumer confidence in the ECB’s ability to maintain price stability, as realised inflation has returned to values closer to 2%. Taken together, our analysis supports the value of longer-term expectations for evaluating the anchoring of consumer inflation expectations. JEL Classification: D84

Suggested Citation

  • Baptista, Pedro & Bates, Colm & Kouvavas, Omiros & Meyer, Justus & Werkmeister, Katia, 2025. "Long-term inflation expectations of consumers: an overview," Economic Bulletin Boxes, European Central Bank, vol. 3.
    • Handle: RePEc:ecb:ecbbox:2025:0003:5
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    More about this item

    Keywords

    Central Bank Credibility; Inflation Expectations;

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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