Meanwhile the ECB's survey of 19,000 euro area consumers showed a similar uptick in expectations last month. Median expectations for inflation over the next 12 months increased for the third month in a row, to 2.8% from 2.6%. However, three years out, expectations were unchanged at 2.4%.

The European Central Bank lowered borrowing costs for a fifth time since June and while policymakers are confident the 2% inflation target is in reach, they are concerned about the euro zone’s stalling economy.