Link Securities | As announced yesterday by ECB analysts, median inflation expectations in the Eurozone for the next 12 months rose in March to 4.0% from 2.5% in February, reaching their highest level since October 2023. Furthermore, March saw the largest monthly increase in this figure since early 2022, when the war in Ukraine began. In March, the conflict in the Middle East, which has led to the blockade of the Strait of Hormuz, has driven up energy prices and heightened fears of more widespread inflationary pressures.
Furthermore, long-term inflation expectations also rose in the Eurozone. Thus, 3-year inflation expectations rose to 3.0% from 2.5% in February, and 5-year expectations increased to 2.4% from 2.3%.
Uncertainty regarding short-term inflation grew, although the upward trend in expectations was consistent across all income groups. Lower-income respondents reported slightly higher short-term expectations, whilst younger respondents (aged 18–34) continued to anticipate lower inflation than older age groups.
