Consumers expect slightly lower inflation and stable income growth

The European Central Bank (ECB) recently released its Consumer Expectations Survey results for February 2026, revealing trends in inflation, income, spending, economic growth, and housing.

The fieldwork for the survey was conducted between February 5 and March 3, 2026, meaning that around 97 per cent of responses were collected before the outbreak of the Middle East war on February 28.

Compared with January 2026, median consumer perceptions of past-year inflation remained unchanged, while median inflation expectations for the next 12 months and three years ahead decreased slightly.

Median inflation expectations for five years ahead were stable. Expectations for nominal income growth over the next 12 months remained steady, while expectations for spending growth over the next 12 months increased.

Consumers’ expectations for economic growth over the next 12 months became less negative, and the expected unemployment rate in 12 months’ time decreased.

Expectations for home price growth over the next 12 months declined, while mortgage interest rate expectations for 12 months remained unchanged.

In February, the median perceived inflation over the previous 12 months stayed at 3.0 per cent.

Median expectations for inflation over the next 12 months and three years ahead both declined to 2.5 per cent from 2.6 per cent in January.

Inflation expectations for five years ahead held at 2.3 per cent, while uncertainty about short-term inflation expectations remained unchanged.

Consumers in lower-income quintiles reported slightly higher inflation perceptions and short-term expectations than higher-income groups, continuing a trend observed since 2023.

“Younger respondents aged 18-34 continued to report lower inflation perceptions and expectations than older respondents aged 35-54 and 55-70,” the ECB said.

Consumers’ nominal income growth expectations for the next 12 months remained at 1.2 per cent, the same as in January.

Meanwhile, perceived nominal spending growth over the past 12 months decreased to 4.6 per cent from 4.9 per cent, while expected nominal spending growth for the next 12 months rose to 3.5 per cent from 3.4 per cent.

Respondents in the lowest three income quintiles expected slightly higher spending growth than those in the highest two quintiles.

Economic growth expectations for the next 12 months increased to -0.9 per cent from -1.1 per cent, indicating a less negative outlook.

Expectations for the unemployment rate 12 months ahead declined to 10.8 per cent from 11.0 per cent.

“Lower-income households expected the highest unemployment rate 12 months ahead at 13.1 per cent, while higher-income households expected the lowest at 9.2 per cent,” the ECB said.

Consumers continued to anticipate the future unemployment rate to be slightly higher than the current perceived rate of 10.4 per cent, reflecting a broadly stable labour market outlook.

Expectations for home price growth over the next 12 months declined slightly to 3.6 per cent from 3.7 per cent.

As observed previously, home price expectations in the lowest income quintile averaged 3.9 per cent, higher than 3.3 per cent in the highest quintile.

Expectations for mortgage interest rates over the next 12 months remained at 4.7 per cent, with lower-income households anticipating 5.5 per cent and higher-income households 4.2 per cent.

The net percentage of households reporting tighter access to credit over the past 12 months declined, as did the net percentage of households expecting tighter credit conditions over the next 12 months.