On Thursday Eurostat, the EU's statistics office,
confirmed a flash estimate at the end of last month that annual inflation had
fallen to 0.4% and also on Thursday the ECB published the results of its
quarterly survey of professional forecasters, which showed that "a number of
respondents argued that the trough of inflation has more or less been reached."
The ECB Survey of Professional Forecasters (SPF)
for the third quarter of 2014 is published in the latest
monthly bulletin [pdf] and its was conducted between 17 and 24 July 2014,
with 59 responses received.
The economists expect inflation to be on an
upward sloping path over the next few years as a result of the recovery in real
economic activity and an unwinding of the downward impact of previous oil, food
and exchange rate developments. In addition, stable inflation expectations and
wage growth, although moderate, are considered to provide a floor to inflation.
The bulletin says that the expected path of
inflation over the period 2014-16 indicates a moderate pick-up from the current
low levels. Compared with the previous round, inflation expectations for 2014
and 2015 were revised downwards slightly to 0.7% and 1.2%, respectively, but
were unchanged at 1.5% for 2016. Long-term inflation expectations edged up by
0.02 percentage point to stand at 1.86%.
Growth expectations were revised downwards
slightly for 2014, but remained unchanged for 2015 and 2016, implying a gradual
strengthening of real GDP growth. Unemployment expectations were revised
downwards across all horizons.