Firms' 12‑month selling‑price expectations climb to 3.5% in SAFE survey

Euro-area inflation is not just a household story anymore. It is also a business pricing story — and the ECB’s latest SAFE survey put a fresh number on it. Firms now expect their selling prices to rise 3.5% over the next 12 months, up from 2.9% in the previous round. That is a meaningful step up, and it landed at an awkward moment for policymakers who were hoping inflation pressure was still cooling. (ecb.europa.eu) ### What is SAFE, exactly? SAFE is the ECB’s Survey on the Access to Finance of Enterprises. It is mostly known for tracking bank lending conditions, but it also asks firms what they expect to happen to their own prices, wages, input costs, and employment over the next year. The latest round covered t(ecb.europa.eu)250 people. (ecb.europa.eu) ### What changed in this round? The headline change was firms’ own selling-price plans. Expected selling-price growth rose to 3.5% from 2.9%. At the same time, expected non-labour input-cost growth surged to 5.8% from 3.6%. Wage expectations, though, moved the other way and slipped to 2.8% from 3.1%. So th(ecb.europa.eu) for a renewed cost squeeze outside wages and seem more willing to pass some of that through. (ecb.europa.eu) ### Why does the wage detail matter? Because central banks have spent the last two years obsessing over wage persistence. If wages were the main problem, softer wage expectations would be reassuring. But this survey points somewhere else. The pressure is coming more from non-labour costs — energy, mat(ecb.europa.eu)s are saying: our costs are rising again, and our own prices will probably follow. (ecb.europa.eu) ### Is this a direct read on future inflation? Not exactly. It is a survey, not a CPI print. But it matters because it captures pricing intent before official inflation data fully shows it. Think of it as a preview of how businesses are thinking. If enough firms expect higher costs and feel able to ra(ecb.europa.eu)ors where pricing is sticky. The ECB itself highlighted stronger selling-price and input-cost expectations alongside a marked rise in short-term inflation expectations. (ecb.europa.eu) ### Why are firms feeling this now? The survey does not reduce the move to one cause, but the timing lines up with a fresh external cost shock. Market coverage tied the jump in price expectations to the Iran war and the spillover into energy and input costs. That matters for Europe because imported en(ecb.europa.eu)is easing. This is the annoying version of inflation for a central bank — not booming demand, just pricier supply. (theedgesingapore.com) ### What else did the survey show? Financing conditions also tightened. A net 26% of firms reported higher interest rates on bank loans, up from 12% in the previous quarter, and the bank-loan financing gap stayed positive at 2%. So firms are dealing with two things at o(theedgesingapore.com)ve. (ecb.europa.eu) ### Why does the ECB care so much? Because this is the kind of signal that complicates rate-cut plans. Softer wages would normally support the case for easier policy. But higher selling-price plans and rising short-term inflation expectations push the other way. The ECB does not react to one survey in isolation, but this one makes it harder to say inflation is fading cleanly and broadly. (ecb.europa.eu) ### Bottom line? The new SAFE round says euro-area firms are preparing to raise prices faster again — not because wage pressure is spiraling, but because non-labour costs are. That is a different inflation channel, but for the ECB it is still inflation. (ecb.europa.eu)