ECB Consumer Expectations: Inflation Expectations Drop by 0.6%, Unemployment Expectations Rise by 2.3%

The ECB's July 2026 Consumer Expectations Survey revealed a sharp decline in consumer inflation expectations, with the 12-month inflation forecast dropping to 3.5% from 3.6%. Longer-term expectations also fell, with 3-year inflation expectations at 2.7% (down from 2.8%). However, unemployment expectations rose to 11.2%, up from 11.4%. Lower-income households continued to report higher inflation and unemployment risks. Housing price expectations remained stable at 3.4%, while mortgage interest rate expectations declined to 4.9%. The survey also showed a tightening in credit access, with fewer households expecting easing. These data are critical for the ECB's liquidity management strategy.