ECB CES: Inflation expectations moderate further

Research evidence excerpt

ECB CES: Inflation expectations moderate further

J P M O R G A N Europe Economic Research

26 June 2026

ECB CES: Inflation expectations

moderate further

Economic and Policy Research

Mariana Monteiro

Median consumers’ perceptions of past inflation were unchanged at 4% in May. (44 20) 3493-5147

One-year-ahead inflation expectations, however, fell 0.5 percentage points to mariana.reispaivamonteiro@jpmorgan.com

3.5%, although they remain 1%-pt above February levels. Three- and five-year J.P. Morgan Securities plc

inflation expectations were steady at 2.9% and 2.4%, respectively – still 0.4%-pt

and 0.1%-pt above pre-energy-shock levels.

Some of the more extreme expectations have continued to ease, as reflected in a

broad-based moderation in mean inflation expectations following the March

surge. Even so, mean expectations remain elevated and continue to suggest

inflation risks are skewed to the upside. Signs of moderation had already emerged

in the more timely European Commission confidence survey for May. We suspect

the further improvement in sentiment in June, reported in this week’s EC flash

release, was again driven by softer inflation expectations (the detailed breakdown

is due next week). If confirmed, this could foreshadow additional easing in

inflation expectations in the June CES survey, due in about a month.

Overall, today’s release supports the view expressed by some ECB policymakers

in the April minutes that March’s increase may have been partly sentiment-driven

and likely to fade as the temporary energy-price surge dissipated. Further declines

in fuel prices and easing uncertainty should reinforce this trend, helping to reduce

pressure for additional tightening – although we expect the descent to be gradual.