European Consumers’ Inflation Expectations Surge on Iran War

Article content(Bloomberg) — Inflation expectations of euro-area consumers jumped in March — a warning sign for the European Central Bank as it assesses the danger of a renewed price spike due to the Iran war.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentAn indicator of where people see prices in a year’s time increased to 43.4 from 26.2 in February, the European Commission said Monday in its monthly business and consumer survey. Managers’ selling-price expectations also rose “sharply,” particularly in industry.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article content“Selling-price expectations moved further beyond their long-term average in all business sectors,” the commission said.Article contentArticle contentECB officials are scrutinizing inflation expectations as they asses whether the jolts in energy markets will spill over into consumer prices more broadly. Data on Tuesday are expected to show euro-zone inflation quickened this month by the most since Russia invaded Ukraine in 2022.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentPresident Christine Lagarde warned last week that memories of four years ago could mean firms and workers react faster this time.

Vice President Luis de Guindos said that if expectations start to de-anchor from the 2% goal, the central bank “will have to react.”Article contentThe commission’s index is some way below the 64.3 peak reached in March 2022.Article contentA separate ECB survey published Friday showed expectations among consumers were falling as the war began. Prices were seen rising 2.5% over the next 12 months and the next three years — both down from the previous month.Article contentMarket-based indicators have also reacted. Long-dated inflation swaps rose sharply in the early days of the war, before paring much of the move as traders started to price interest rate hikes.Article contentThe 5y5y inflation swap, which represents the market’s expectation of five-year average inflation, starting in five years’ time, rose from 2.08% at the end of February to as high as 2.30%. It’s since declined back to about 2.16%.Article contentShorter-dated swaps, which are particularly sensitive to commodity prices, have also climbed. The 1y1y swap is trading around 2.23%, the highest since mid-2024 and almost 50 basis points higher than at the end of February.Article content—With assistance from James Hirai.Article contentTrending Oil Gains as Iran War Escalates With Houthi Attacks on Israel PMN Business Iran oil revenue soars as it's the only exporter out of Hormuz Oil & Gas A 35-Year-Old Crypto Bro Helped Pakistan Win Over Trump World PMN Business Iran's Attacks on Mideast Aluminum Plants Threaten Supply Crisis PMN Business Meet the Canadian e-bike maker who is redefining the factory floor Electric Vehicles Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Oil Gains as Iran War Escalates With Houthi Attacks on Israel PMN Business Iran oil revenue soars as it's the only exporter out of Hormuz Oil & Gas A 35-Year-Old Crypto Bro Helped Pakistan Win Over Trump World PMN Business Iran's Attacks on Mideast Aluminum Plants Threaten Supply Crisis PMN Business Meet the Canadian e-bike maker who is redefining the factory floor Electric Vehicles