Economists raise inflation forecasts

Economists questioned by the European Central Bank (ECB) have raised their inflation forecasts for 2026 and 2027, influenced by energy factors. According to the results published on October 30 by the Bank of France, the professional forecasters surveyed by the ECB now expect an average inflation rate of 3% in the euro area in 2026, followed by 2.6% in 2027. Their estimates have been raised by 0.3 and 0.4 percentage points respectively compared to the previous survey.

Energy costs drive inflation revision

The increase in energy costs is the main factor behind the revision. For French consumers, this signal affects both heating and fuel expenses and the prices of goods and services that are likely to gradually incorporate production and transport cost increases.

Survey details and assumptions

The detailed survey by the ECB is based on 52 responses collected between October 2 and 7, 2026. It reflects the assessments of professional forecasters, and not a new official projection from the central bank's services. Their scenario assumes an inflation rate of 2% in 2028, as in the previous edition. Long-term expectations for 2031 remain set at 2% as well. Therefore, the revision mainly concerns the duration and transmission of the energy shock in the short and medium term.

Core inflation expectations

Core inflation, which excludes energy and food, is expected to be 2.4% in 2026, then 2.5% in 2027. The latter figure has been raised by 0.2 percentage points. Respondents believe that the indirect effects of energy prices should be particularly visible next year.

ECB meeting and interest rates

The publication comes the day after a monetary policy meeting. On October 29, the ECB's Governing Council left its three key interest rates unchanged, while noting that rising energy prices increase inflation risks and weigh on growth prospects. The deposit facility rate therefore remains at 2.50%. Future decisions will depend on economic data and the evolution of risks, rather than a predetermined schedule for rate increases. For French borrowers, the evolution of credit rates will also depend on the financing conditions of banks and competition between institutions.

Mixed economic growth

The economic context remains mixed. According to the first estimate published on October 30, Eurostat reports a 0.4% increase in GDP in the euro area in the third quarter, following a 0.6% increase in the second. The European Union as a whole shows a 0.5% increase. The differences between countries are marked: Germany grows by 0.2%, Spain by 0.6%, while France declines by 0.1% for the quarter. These preliminary data may still be revised.

Future growth expectations

The forecasters questioned by the ECB nevertheless expect annual growth of 1% in the euro area in 2026, then 1.3% in 2027. They have raised their forecast for this year, taking into account the available economic data at the beginning of October.

Impact on households and businesses

A higher average inflation means prolonged pressure on purchasing power, particularly for energy-exposed expenses. It also complicates the trade-offs for businesses between selling prices, margins, and investments. However, the situation for each household depends on its consumption, income, and energy contracts.

Next inflation data release

Eurostat's next rapid estimate for October inflation is expected on November 4. It will provide a comparison point with these expectations, while the ECB will continue to assess the magnitude of the energy shock before its next decision.