Euro zone consumers trim inflation expectations to lowest in 3 years

FRANKFURT (Reuters) – Euro zone consumers have trimmed their inflation expectations for the next 12 months to the lowest level in three years, a European Central Bank poll showed on Friday, in a further sign the ECB is close to winning its battle to rein in prices.

The Consumer Expectations Survey is a gauge of whether households have faith in the ECB’s ability to bring inflation down to its 2% target, which in turns may influence their behaviour when spending, saving or asking for pay hikes.

In the August edition of the survey, the median respondent saw prices growing by 2.7% in the following 12 months, the slowest pace since September 2021 and down from 2.8% in July.

Consumers also cut their inflation expectations for three years ahead – from 2.4% to 2.3%, the lowest level since June.

The ECB reduced borrowing costs earlier this month, adding to a first cut in June, on the back of weaker growth forecasts and expectations for a continued, albeit bumpy, fall in inflation over the next year.

And policy doves at the euro zone central bank are preparing to fight for a further reduction in October after a string of weaker-than-expected economic data, a move likely to meet resistance from their more hawkish peers, sources told Reuters.