Accuracy / Greeks are scared of inflation – What the ECB’s research reveals

Inflationary expectations of households in the Eurozone fell in March to the lowest level since December 2021, but in Greece they remained high according to a monthly survey by the European Central Bank (ECB Consumer Expectations Survey Results).

The average expectation of households in the Eurozone was that inflation would move next twelve months to 3%, from 3.1% they estimated in February, while for inflation after three years their expectations remained stable, at 2.5%, for fourth consecutive month. In Greece, on the contrary, the expectation has remained stable since last December that inflation will reach 10% in the next twelve months, while already in March ECB data showed that it was moving at an annual rate of 3.2%. Notably, household inflation expectations were higher than 14% in early 2023, likely affected by much larger increases in food prices than the general index.

At the same time, the Greeks are also pessimistic regarding their economic course, as they predict that their net income will decrease by 2% in the next twelve months, while in the Eurozone expectations are for an increase of 1.3%, slightly lower than February (1.4%).

There is also pessimism about the course of the economy among Greek households, as they predict a negative growth of 4% or more in the same period, although the GDP increased by 2% in 2023 according to ELSTAT data. Negative growth, but less intense (-1.1%) is also predicted by households in the Eurozone for the next twelve months.

In terms of house prices, expectations in the Eurozone remained steady for an increase of 2.4% over the next twelve months, while in Greece they increased further towards 10%, from just over 8% in February.