In June 2025, the European Central Bank’s Consumer Expectations Survey revealed that consumer perceptions of inflation over the past year remained steady. Expectations for inflation three and five years ahead also showed no change, while expectations for inflation one year ahead decreased. Meanwhile, predictions for nominal income growth over the next year stayed constant, but spending growth expectations dropped. Economic growth forecasts became less negative, and unemployment rate predictions for a year from now fell slightly. Additionally, expectations for home price increases and mortgage interest rates in the coming year declined marginally.
The survey indicated that perceived inflation over the previous 12 months held at 3.1% for the fifth month in a row, marking its lowest since September 2021. Median expectations for inflation over the next year decreased by 0.2 percentage points to 2.6%, reversing increases seen in March and April. Three-year and five-year inflation expectations remained unchanged at 2.4% and 2.1%, respectively.
Income expectations stayed at a median of 1.0% growth over the next year, with higher income individuals expecting less growth compared to lower income groups who anticipated more. Spending growth expectations fell to 3.2% from May’s 3.5%. This decrease is attributed to economic uncertainty and lower expected inflation.
Economic growth predictions improved slightly to -1.0% from May’s -1.1%. Unemployment rate expectations decreased to 10.3%, close to the current perceived rate of 9.8%, suggesting stability in labor market outlooks.
Housing market forecasts showed a slight decline in expected home price increases to 3.1%. Mortgage interest rate expectations also fell slightly to 4.3%. Lower income households continued to expect higher mortgage rates than their higher income counterparts.
The data behind these findings are accessible on the Consumer Expectations Survey web page, with July results scheduled for release on August 29, 2025.
Information from this article can be found here.
