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ECB survey shows rising inflation expectations for year ahead

FILE PHOTO: Specialists work on a crane in front of the European Central Bank (ECB) in Frankfurt, Germany

FRANKFURT (Reuters) - Euro zone consumer expectations for inflation in the year ahead rose in October but predictions for three years out held steady at a rate still well above the European Central Bank's 2% target, the ECB said in a monthly survey on Wednesday.

Inflation soared this year on sky high energy and food prices, and the ECB has been raising rates at a record pace to temper at least longer-term expectations.

Median inflation expectations over the next 12 months rose to 5.4% in October from 5.1% in September, while expectations for inflation three years ahead were unchanged at 3.0%, the ECB said based on a survey of about 14,000 people in six of the euro zone's biggest countries.

Inflation hit a record high 10.6% in October and dropped to 10% last month but its decline in early 2023 is expected to be slow before disinflation accelerates in the second half of the year.

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The increase in the inflation outlook even came as consumers became more pessimistic about growth and employment, the ECB said.

Economic growth expectations for the next 12 months declined to -2.6% from -2.4% in September while unemployment is seen rising and income growth is expected to trail inflation.

(Reporting by Balazs Koranyi; Editing by Toby Chopra)