Inflation Expectations Rise as Energy Costs Remain High
Households may face elevated costs through 2027 as forecasters bump up inflation expectations for the coming two years.
Updated on Oct. 30, 2026 in Inflation
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Professional forecasters have raised their expectations for 2026 inflation to 3.0% as higher energy costs filter into the European economy. While near-term price pressures have increased, long-term projections remain anchored at 2.0%.
Why it matters
Rising inflation forecasts suggest that household purchasing power may face continued strain in the near term due to energy price volatility. These shifts force a re-evaluation of household budgets as forecasters anticipate that energy-related cost effects will persist into 2027.
Forecasters expect headline inflation to reach 3.0% in 2026 and 2.6% in 2027, marking an upward revision of 0.3 percentage points for the current year. Long-term inflation is expected to settle at 2.0% by 2031, despite near-term volatility.
The players
European Central Bank
The central banking institution for the European Union that sets monetary policy and monitors economic stability.
The details
The upward revisions stem from increased energy prices, which act as a direct cost to households and an indirect cost through goods and services. While professional forecasters expect some additional energy shocks in 2027, they project only limited second-round effects on broader prices. This indicates that while immediate household expenses for power and fuel are likely to climb, the overall economic feedback loop may remain contained.
Timeline
The European Central Bank released its latest survey on October 30, 2026.
Headline inflation is expected to hit 3.0% throughout 2026.
Forecasters anticipate inflation will moderate to 2.6% in 2027.
Economic projections look toward a return to 2.0% inflation by 2031.
Money Landscape
These revisions push projected inflation above the European Central Bank's 2.0% target for the next two years. The outlook signals a departure from stable pricing trends, though forecasters maintain that long-term price stability will be achieved by 2031.
Households should prepare for persistent pressure on disposable income as energy-driven price hikes likely continue into 2027. Reviewing your budget for potential fuel and utility cost increases is a prudent step to discuss with a financial professional.
The takeaway
The latest forecast highlights a period of higher-than-expected inflation driven by energy market volatility that will likely linger through 2027. Households should audit their utility and transportation budget lines now to better absorb potential price swings in the coming months.
Further reading
Learn more about price trends in our Inflation section.
More information
View the complete ECB Survey of Professional Forecasters report for detailed methodology.
Source note: This article includes information reported by European Central Bank.
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