The European Central Bank’s Consumer Expectations Survey shows a meaningful cooling in short-term inflation expectations for May, offering a rare moment of relative calm after a turbulent spring.
The numbers behind the mood swing
In February’s survey, one-year-ahead inflation expectations sat at a relatively tame 2.5%. By March, that figure had catapulted to 4.0%, a jump so large it raised eyebrows across European trading desks.
The April survey, published on June 1, showed one-year expectations holding steady at that elevated 4.0% level. Perceived inflation over the prior 12 months actually climbed further, rising to 4.0% from 3.5% in March.
The longer-term picture told a different story. Three-year inflation expectations edged down to 2.9% from 3.0% in March. Five-year expectations held flat at 2.4%, not far from the ECB’s 2% medium-term target.
