Meanwhile, three-year expectations remained at 2.4%, while five-year prospects remained stable at 2.1% for the seventh consecutive month.

Uncertainty regarding inflation expectations for the next 12 months remained unchanged in June.

Overall, the evolution of inflation perceptions and expectations followed similar trends across income groups.

Younger respondents (aged 18 to 34) continued to report lower inflation perceptions and expectations than older respondents (aged 35 to 54 and 55 to 70), although the difference was smaller than in previous years.

Regarding income and consumption, consumers' expectations regarding nominal income growth over the next 12 months remained at 1% in June.

This apparent stability masks a decline in expectations among higher-income individuals, offset by an increase in expectations among lower-income groups, explains the ECB.

Expected nominal spending growth for the next 12 months decreased to 3.2% in June, compared to 3.5% in May and 3.7% in April.

This decline reflects the growing economic uncertainty of recent months, as well as lower expected inflation, the Central Bank points out.

Expectations for economic growth for the next 12 months became less negative, from -1.9% in April to -1.1% in May and -1% in June.

Outlooks for the 12-month unemployment rate declined slightly to 10.3% in June, compared to 10.4% in May.

Consumers continue to expect the future unemployment rate to be only slightly higher than the current perceived unemployment rate (9.8%), which suggests a stable outlook for the labour market. On the other hand, consumers expect their home prices to increase by 3.1% over the next 12 months, a slight decrease from May (3.2%).

Expectations for 12-month mortgage interest rates fell to 4.3%, down from 4.4% in May.

As in previous months, lower-income households expected higher mortgage rates in 12 months (4.9%), while higher-income households expected lower rates (3.9%).

The percentage of households reporting expecting tighter credit conditions in the next 12 months decreased slightly.