Consumers in the European Zone are bracing that an economic slowdown and high inflation will continue to put pressure on their incomes next year, a European Central Bank (ECB) survey said.
The Consumer Expectations Survey, which policymakers use as input in their deliberations and was published on Thursday for the first time, showed households are beginning to lose confidence in the ECB's ability to bring inflation back down to its 2% target.
According to a survey conducted in June, consumers expect prices to rise by 5% in the following year and see inflation at 2.8% over three years.
This compares with expectations for nominal income to increase by 0.9% and spending by 3.9%, implying a large reduction in households' ability to save. Consumers also expect the economy to contract by 1.3% next year.
Meanwhile, the ECB predicts inflation to average 6.8% this year before falling to 3.5% in 2023 and 2.1% in 2024. It sees growth at 3.7% in 2022, 2.8% next year and 1.6% in the next 2 years.
For information, this survey was conducted through interviews with 14,000 households every month from Belgium, Spain, Germany, France, Italy and the Netherlands which represent 85% of the GDP of the European Zone.
