European Union Consumer Price Expectations

Since May 2003, the European Commission has been collecting direct quantitative information on consumer perceptions and expectations of inflation in the Euro zone, the European Union (EU) and the accession countries through its consumer survey. It is about consumers' opinions on inflation, which are relevant not only for policy purposes, but also because possible inflation values become available earlier and because they provide information on the expectations of economic agents. The normal consumer price index measures only current inflation, not future ones. While the subjective estimates data of more than 40,000 randomly selected consumers are biased according to education, age, income, region and gender, this error can to some extent be corrected mathematically, making the survey data indispensable for economic surveillance in the EU and for monitoring the economic prospects of Economic and Monetary Union and the economic development of the candidate countries. They are used for the half-yearly economic forecasts and for the analysis of cyclical developments (e.g. identification of turning points) and by several different Commission services, including the ECB and the OECD.

Surveys are collected in the first half of the month and published on the last day of the month. The possible answers are limited to 6 answers to questions on current and expected price developments: strong, moderate or slightly rising, steady, falling or do not know.

The impact of the published figures depends heavily on the current economic environment. Inflation that is too high could induce the ECB to raise interest rates, which in turn could lead to a rise in the currency. In difficult economic times, however, rising inflation could deepen a recession even further, which would depress the currency.