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MNI BRIEF:Eurozone Consumer Price Expectations At New High-ECB

(MNI) London

The euro area consumer outlook for inflation rose sharply in March, the latest ECB Consumer Expectations Survey showed on Thursday, with median expectations for increases in prices over the next 12 months rising to 5.0% from 4.6% in February -- the highest level recorded since the survey started in April 2020.

On assumptions for current inflation levels, consumers perceived inflation over the last 12 months at 9.9% -- up from 8.7% in February and compared to March's actual 6.9% headline reading published by Eurostat. Expectations for three years ahead rose to 2.9% from 2.4%, the survey showed, above the ECB's current projection for inflation to fall back to just above the 2% target. (See MNI SOURCES: ECB To Hold Rates At Peak Into 2024)

According to the survey, consumers expect nominal wage growth to increase 1.3%, up from 1.2% in February, although the survey highlighted a demographic split as older workers expected to see declines.

This data adds to concerns that high inflation expectations are becoming more entrenched, with the ECB flagging last week that "some indicators have edged up and warrant continued monitoring". However, the uptick looks unlikely to last. The EC's April Economic Sentiment survey for April found inflation expectations cooled, with consumer price expectations the softest since December 2020 and services selling price expectations moderating for a third consecutive month.

MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |

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