Euro Zone Consumers Raise Short-Term Inflation Expectations Amid Global Trade Uncertainty

Consumers in the euro zone raised their short-term inflation expectations in April, reflecting heightened economic uncertainty driven by a global trade war, according to the European Central Bank’s (ECB) Consumer Expectations Survey released on Wednesday. Households now anticipate inflation to hit 3.1% over the next year, up from 2.9% in March, significantly surpassing the ECB’s 2% inflation target.

Despite these rising short-term expectations, the outlook for medium- and long-term inflation remains steady. The ECB noted that consumers continue to expect price growth at 2.5% in three years and 2.1% in five years. These figures are based on a survey of 19,000 adults across 11 euro zone nations, suggesting persistent uncertainty without a dramatic shift in longer-term consumer sentiment.

The ECB’s own projections indicate that inflation should slow in the coming months, citing subdued economic growth, modest wage increases, declining energy prices, and a stronger euro. However, the divergence between consumer expectations and ECB forecasts—coupled with ongoing concerns about U.S. tariffs—is pushing the central bank toward another interest rate cut, expected to be the eighth in just over a year.

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