Consumers in the euro area lowered their inflation expectations in February and now have a more optimistic view of growth and unemployment, according to a new survey by the European Central Bank (ECB).

Over the next 12 months, expectations of inflation have fallen to 4.6%, from the previous 4.9%, the ECB reported on Tuesday based on a monthly survey of 14,000 adults in the six largest euro area countries.

Although consumers still expect an economic downturn, even after solid indicators suggest the bloc has avoided recession, they have become slightly more optimistic in their assessments.

Expectations for growth in the next 12 months increased to -0.9%, compared to -1.2% on the month while the estimate of the unemployment rate in the next 12 months softened to 11.5% from 11.6%.

Regarding income growth, however, consumers have become more pessimistic and expect their nominal income to increase by 1.2% in the coming year, down from 1.3% in January.

Actual nominal income growth is running in the 5% to 6% range and some policymakers are worried that this is out of sync with a 2% inflation target, even if consumers are still just catching up after two years to ultra-fast inflation.

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