Europeans feel more uncertain about their future, according to the latest consumer expectations survey conducted by the European Central Bank (ECB).
Some key findings in the survey revealed that European consumers’ expectations regarding the increase in mortgage interest rates over the next twelve months have skyrocketed to a new high, while they expect higher inflation compared to the previous survey of July-August.
Expectations have deteriorated regarding economic growth and the unemployment rate with their estimates for rent hikes slightly down.
Specifically, consumer expectations for inflation have significantly increased, as their estimated average inflation rate over the past 12 months rose to 8.0 percent from 7.9 percent.
Consumers expect their nominal income to increase by 1.2 percent over the next 12 months, as in August, attributed mainly to the expectations of consumers in the lower 20 percent income bracket, which have further increased, while expectations of consumers in the other four quintiles remained generally stable or fell.
Expectations for economic growth over the next 12 months have moved to more negative territories compared to August, at -1.2 percent versus -0.8 percent in August.
In line with the lower expectations for economic growth, expectations for the unemployment rate 12 months prior increased to 11.4 percent, compared to 11.1 percent in August.
Consumers continued to expect that the future unemployment rate would be only slightly higher than the estimated current unemployment rate (11.1 percent ), indicating a generally stable job market.
The lower income scale continued to be more pessimistic, citing higher expected unemployment rates.
Regarding access to housing and credit, consumers expect housing prices to increase by 2.2 percent over the next 12 months, slightly lower than in August (2.3 percent).
Expectations for housing loan interest rates 12 months ago further increased to 5.4 percent, from 5.2 percent in August, the highest rate since the beginning of the survey and 0.6 percentage points higher than at the end of 2022.