Consumer inflation expectations across the euro zone edged lower in July, providing some relief to the European Central Bank as it weighs the potential price pressures stemming from the Iran conflict.
The ECB's monthly survey, released on Friday, showed that consumers now anticipate prices will rise by 2.9% over the next 12 months, down from 3% in June. Meanwhile, the three-year inflation outlook, which is more closely monitored by policymakers, slipped to 2.7% from 2.8% in the previous month.
The survey was conducted between July 2 and July 27. During that period, markets initially saw hope for a peace deal between the US and Iran, but military tensions soon escalated again, leading to further volatility in oil and natural gas prices.
Additionally, respondents projected that the euro zone's 21-country economy would contract by 1.2% in the year ahead, a slight improvement from the 1.4% decline they had expected in June.
Related reading: All major euro zone economies post growth despite Iran war pressures
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