European Central Bank data shows consumer inflation expectations fell to 2.6% in January, down from 2.8% in December. The decline reflects cooling price pressures across the eurozone economy, with median inflation perceptions over the previous 12 months also dropping to 3.0% from 3.2%. The survey reveals a broad-based easing of inflation concerns among European consumers.

Looking further ahead, expectations for three-year inflation remained stable at 2.6%, while five-year projections edged down to 2.3% from 2.4%. Lower-income households continue to report higher inflation perceptions than wealthier respondents, a pattern consistent since 2023. The data shows younger consumers aged 18-34 maintain lower inflation expectations than older demographics.

Income growth expectations edged up to 1.2% from 1.1%, driven by the highest three income quintiles. Economic growth expectations remained negative at -1.1%, with unemployment forecasts unchanged at 11.0%. The survey also found improving labor market sentiment, with unemployed respondents reporting a higher probability of finding work and employed workers feeling more secure in their jobs.