European Consumer Inflation Angst Isn’t Yet Receding
It would appear that the decline in European natural gas prices has contributed to an increase in Eurozone GDP estimates for the year. Once prices crossed below $50, GDP estimates began to rise, and now the consensus expects .6% GDP growth from the Eurozone this year.
But, the inflation angst is not over in Europe. Just today, the European Central Bank delivered the ECB Consumer Inflation Expectations Survey for March 2023. Our AI model summarized the results.
-Consumer inflation expectations increased significantly in March 2023, with the median rate of perceived inflation over the previous 12 months increasing to 9.9%.
-Expectations for economic growth over the next 12 months became slightly more negative, while expectations for nominal spending growth rose further.
Last week, the ECB released the results of the ECB Survey of Professional Forecasters for the second quarter of 2023. Our AI model summarized the results of this survey as well.
–Inflation expectations for 2023 have been revised down, while real GDP growth expectations were revised up for 2023 but down slightly for 2024 and 2025.
-Unemployment rate expectations have been revised down for the period of 2023-25.
–Longer-term inflation expectations remain unchanged at 2.1%.
So, if recent data is any indication, professional forecasters see the trend of receding inflation and improving economic growth as suggested in the first chart comparing gas prices to GDP forecasts. Consumers, however, remain concerned about inflation. Perhaps events since March will have tempered the consumer inflation angst as natural prices have fallen by a third since then.
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