FRANKFURT, March 27 (Reuters) - Euro zone consumers were reducing their inflation expectations in the run-up to the U.S.-Israeli war on Iran, before a surge in energy prices fundamentally changed the
Euro Zone Inflation Expectations Fell Before Iran Conflict, ECB Survey Shows
ECB Survey Reveals Shifting Inflation Expectations Amid Geopolitical Tensions
Overview of Survey Findings
FRANKFURT, March 27 (Reuters) - Euro zone consumers were reducing their inflation expectations in the run-up to the U.S.-Israeli war on Iran, before a surge in energy prices fundamentally changed the outlook, a European Central Bank survey showed on Friday.
Short and Medium-Term Inflation Expectations
Median expectations for inflation over the next 12 months and three years ahead both declined to 2.5% from 2.6% last month, while inflation expectations for five years ahead remained unchanged at 2.3%, the ECB's Consumer Expectations Survey showed.
Timing of Survey Responses
However, 97% of the survey responses were collected before the war broke out on February 28, the ECB added.
Impact of Energy Prices and Updated ECB Projections
The ECB has since then sharply raised its inflation projections on surging energy costs, and a raft of surveys now indicate souring consumer expectations and surging prices.
The ECB sees inflation peaking above 3% under its most benign scenario while its adverse and severe scenarios see sharply higher and longer price surges.
Reporting Credits
(Reporting by Balazs Koranyi, Editing by Timothy Heritage)
