Consumer expectations provide an important window into how households perceive economic conditions and how those perceptions may influence spending, borrowing and financial decisions.

Recent survey results show a mixed picture across the euro area: perceptions of recent inflation remained elevated, while expectations for future price increases moved higher across several time horizons.

Inflation Expectations Move Higher

Inflation remained one of the clearest areas of concern in the survey. In August, consumers estimated that prices had risen by a median 3.5% over the previous year, unchanged from July. Expectations for future inflation, however, increased. The median expectation for inflation over the next 12 months climbed from 2.9% in July to 3.0% in August.

Expectations three years ahead rose from 2.7% to 2.9%, while the five-year expectation increased from 2.4% to 2.5%. The changes are relatively small in percentage-point terms, but inflation expectations matter because they can influence decisions made by households and businesses. If consumers expect prices to rise more rapidly, spending patterns, wage discussions and borrowing decisions can gradually adjust in response.

The survey also showed differences between income groups. Households in the lowest income group continued to report higher inflation perceptions and expectations than those in the highest income group. Younger respondents also tended to report lower inflation perceptions and expectations than older age groups.

Income and Spending Remain Relatively Stable

Expectations surrounding household income showed little movement. Consumers continued to anticipate nominal income growth of 1.0% over the next 12 months. Spending expectations were similarly stable. Expected nominal spending growth remained at 3.6%, although consumers' assessment of spending growth during the previous 12 months edged up to 5.2% from 5.1%.

The difference between expected income and spending growth is economically significant. When anticipated spending rises faster than anticipated income, households may need to rely more heavily on existing savings or credit to maintain consumption. Such patterns can affect household financial resilience, particularly when price pressures remain elevated.

Economic Growth Expectations Remain Weak

Expectations for economic growth over the next 12 months remained at -1.2% in August, indicating that households continued to hold a cautious assessment of the near-term economic outlook. The labour-market picture was somewhat more positive. Consumers lowered their expected unemployment rate for the coming year to 11.0%, compared with 11.2% in July.

The perceived current unemployment rate was 10.5%, meaning households expected only a modest increase over the following year.

Income differences were again visible. Respondents in the lowest income group expected unemployment to reach 13.4%, while the highest income group anticipated a considerably lower rate of 9.4%.

Housing Costs Show Limited Movement

Housing expectations were more stable than inflation expectations. Consumers anticipated that home prices would increase by 3.4% over the next 12 months, broadly unchanged from the previous survey period. Differences between income groups were again apparent. Households in the lowest income quintile expected home prices to increase by 4.0%, compared with 3.2% among households in the highest income quintile.

Expected mortgage interest rates also remained unchanged at 4.9% for the coming year. The lowest-income group anticipated rates of 5.7%, while the highest-income group expected 4.4%.

Credit conditions showed a modest improvement in sentiment. The share of households reporting tighter access to credit declined, while expectations of further tightening also decreased.

Expert Insight

Christine Lagarde, President of the European Central Bank, has emphasized that interest-rate decisions cannot be determined by a single economic variable. Speaking at a press conference in September 2026, Lagarde stated: “Interest rates do not move in lockstep with the price of energy.”

Why Consumer Expectations Matter

Consumer surveys are valuable because official economic statistics generally describe what has already happened, while expectations provide information about how households anticipate future conditions. If inflation expectations remain anchored near a central bank's objective, temporary price increases are less likely to become deeply embedded in household and business decisions. Conversely, sustained increases in expected inflation can complicate the process of returning inflation to a stable level.

The latest consumer expectations data present a mixed economic picture. Perceptions of past inflation remained at 3.5%, while expectations for inflation one, three and five years ahead all increased. Income and spending expectations were largely unchanged, and the outlook for economic growth remained cautious.

At the same time, expected unemployment declined slightly, while housing-price and mortgage-rate expectations showed little change. Differences between income groups remained significant, highlighting how economic conditions can be perceived differently across households.

Overall, the figures point to continued caution among consumers rather than a dramatic shift in economic sentiment. Future developments in prices, employment, income and spending will remain important for determining whether current expectations become more firmly established or begin to moderate.