Households’ Inflation Expectations Survey

Households’ Inflation Expectations Survey

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Today, the Reserve Bank released the results of the September 2018 round of the Inflation Expectations Survey of Households (IESH)1 2. The survey was conducted in 18 cities and the results are based on responses from 5,760 urban households covering various occupational categories.

Highlights:

i. The proportion of respondents expecting general prices to rise at more than the current rate in the next three months and one year ahead horizons remained similar to that in the June 2018 round (Tables 1 a and b).

ii. At the product group level, a higher proportion of respondents expect prices of food and non-food products to rise faster than the current rate.

iii. Three months ahead median inflation expectations rose sharply by 50 basis points (bps) compared to that in the June 2018 round; however, over the longer horizon of a year ahead, households lowered their expectations by 30 bps (Chart 1, Table 2).

iv. The gap between the current perceptions and near term inflation expectations widened while it narrowed down over the medium term.

Note: Please see the excel file for time series data.

Table 1(a): Product-wise Expectations of Prices for Three Months ahead
(Percentage of Respondents)
Round Sep-17 Mar-18 May-18 Jun-18 Sep-18
Options: General Estimate SE
Prices will increase 81.3 80.2 82.3 83.8 80.4 0.92
Price increase more than current rate 50.5 45.4 50.5 50.1 49.1 1.15
Price increase similar to current rate 25.4 27.2 25.1 26.4 27.6 1.00
Price increase less than current rate 5.4 7.5 6.7 7.3 3.7 0.38
No change in prices 15.8 17.8 16.0 14.6 17.4 0.88
Decline in prices 2.9 2.1 1.7 1.6 2.2 0.31
Options: Food Product            
Prices will increase 79.5 79.6 82.0 81.4 79.5 0.89
Price increase more than current rate 47.5 44.0 48.3 47.8 48.9 1.12
Price increase similar to current rate 24.8 24.9 24.5 24.8 24.5 0.91
Price increase less than current rate 7.3 10.7 9.3 8.7 6.1 0.48
No change in prices 13.3 15.4 13.5 13.3 15.5 0.82
Decline in prices 7.1 5.0 4.5 5.3 4.9 0.40
Options: Non-Food Product            
Prices will increase 74.7 75.0 78.4 78.2 78.9 0.87
Price increase more than current rate 43.4 39.6 45.8 44.5 47.5 1.11
Price increase similar to current rate 24.8 25.4 24.0 24.4 25.3 0.91
Price increase less than current rate 6.6 10.0 8.6 9.3 6.1 0.48
No change in prices 19.3 20.8 18.1 17.7 17.1 0.81
Decline in prices 5.9 4.2 3.6 4.1 4.0 0.38
Options: Household Durables            
Prices will increase 61.5 63.7 63.2 58.7 56.6 1.05
Price increase more than current rate 37.3 34.7 36.7 32.6 32.4 1.05
Price increase similar to current rate 19.1 20.7 19.9 19.1 19.5 0.80
Price increase less than current rate 5.1 8.3 6.6 7.1 4.7 0.41
No change in prices 25.3 26.2 26.8 30.9 30.8 0.98
Decline in prices 13.2 10.1 10.0 10.4 12.5 0.66
Options: Housing Prices            
Prices will increase 68.9 70.0 71.6 71.6 67.1 0.92
Price increase more than current rate 44.9 43.9 47.6 45.3 45.2 1.02
Price increase similar to current rate 19.2 18.8 18.2 19.9 17.9 0.78
Price increase less than current rate 4.9 7.3 5.8 6.4 4.0 0.40
No change in prices 20.0 22.4 20.8 20.7 24.1 0.87
Decline in prices 11.1 7.7 7.7 7.7 8.8 0.59
Options: Cost of Services            
Prices will increase 68.7 70.2 72.0 70.8 67.7 1.04
Price increase more than current rate 40.7 38.3 42.9 40.8 41.8 1.15
Price increase similar to current rate 22.5 23.5 22.6 22.8 21.0 0.89
Price increase less than current rate 5.5 8.3 6.6 7.3 5.0 0.43
No change in prices 27.3 26.6 25.6 26.5 29.6 1.01
Decline in prices 4.0 3.3 2.4 2.6 2.7 0.33
Note:
1. The table provides estimates and standard errors for qualitative responses for September 2018 round. For earlier rounds, the results are based on sample proportions.
2. Constituent items may not add up to the corresponding total, due to rounding off.

Table 1(b): Product-wise Expectations of Prices for One Year ahead
(Percentage of Respondents)
Round Sep-17 Mar-18 May-18 Jun-18 Sep-18
Options: General Estimate SE
Prices will increase 93.5 90.8 91.1 91.6 88.3 0.77
Price increase more than current rate 61.2 56.7 62.6 59.8 59.7 1.15
Price increase similar to current rate 27.3 28.0 23.4 25.8 25.3 0.97
Price increase less than current rate 5.0 6.2 5.0 6.0 3.3 0.35
No change in prices 4.1 7.1 6.5 6.5 9.1 0.69
Decline in prices 2.5 2.2 2.4 1.9 2.6 0.32
Options: Food Product            
Prices will increase 84.8 85.0 85.6 85.1 84.8 0.78
Price increase more than current rate 51.4 47.4 53.4 51.4 52.5 1.16
Price increase similar to current rate 27.5 28.9 25.2 26.5 27.0 0.96
Price increase less than current rate 6.0 8.7 7.0 7.1 5.3 0.45
No change in prices 9.3 10.2 9.4 9.7 9.7 0.64
Decline in prices 5.9 4.8 5.0 5.3 5.5 0.45
Options: Non-Food Product            
Prices will increase 81.4 80.0 82.7 83.3 82.3 0.79
Price increase more than current rate 48.2 44.2 51.1 49.1 51.0 1.18
Price increase similar to current rate 26.7 26.8 25.3 26.6 26.1 0.91
Price increase less than current rate 6.5 9.0 6.3 7.6 5.2 0.44
No change in prices 13.8 15.8 13.2 12.7 13.1 0.70
Decline in prices 4.8 4.3 4.1 4.0 4.6 0.40
Options: Household Durables            
Prices will increase 70.7 71.1 72.5 70.6 67.5 0.97
Price increase more than current rate 42.7 40.1 45.2 41.6 40.7 1.10
Price increase similar to current rate 22.6 23.4 21.5 21.8 22.0 0.83
Price increase less than current rate 5.4 7.7 5.8 7.2 4.8 0.42
No change in prices 19.1 19.9 19.2 21.2 22.6 0.84
Decline in prices 10.2 9.0 8.3 8.2 10.0 0.58
Options: Housing Prices            
Prices will increase 78.9 80.2 79.8 81.0 77.9 0.89
Price increase more than current rate 53.0 50.9 55.2 53.0 52.9 1.08
Price increase similar to current rate 20.8 22.5 19.6 21.5 21.0 0.87
Price increase less than current rate 5.1 6.8 5.0 6.5 4.0 0.38
No change in prices 12.4 13.9 13.9 13.3 15.1 0.74
Decline in prices 8.8 5.9 6.3 5.7 7.0 0.52
Options: Cost of Services            
Prices will increase 82.9 82.6 84.2 84.1 82.0 0.81
Price increase more than current rate 48.6 45.3 52.9 49.5 49.7 1.18
Price increase similar to current rate 27.9 28.6 24.4 26.6 27.3 0.96
Price increase less than current rate 6.4 8.7 6.9 8.0 5.0 0.44
No change in prices 13.5 14.9 13.5 13.7 15.6 0.76
Decline in prices 3.7 2.5 2.4 2.2 2.4 0.29
Note:
1. The table provides estimates and standard errors for qualitative responses for September 2018 round. For earlier rounds, the results are based on sample proportions.
2. Constituent items may not add up to the corresponding total, due to rounding off.

Table 2: Inflation Expectations of various Groups: September 2018
  Current Three months ahead One year ahead
Mean Median Mean Median Mean Median
Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Overall 9.2 0.12 8.4 0.19 9.9 0.12 9.4 0.27 9.6 0.14 9.8 0.23
Gender-wise                        
Male 9.3 0.14 8.4 0.19 10.0 0.14 9.4 0.31 9.6 0.17 9.8 0.28
Female 9.4 0.16 8.9 0.37 10.1 0.16 9.8 0.32 9.7 0.22 10.0 0.25
Category-wise                        
Financial Sector Employees 8.5 0.41 7.7 0.60 9.1 0.40 8.4 0.43 8.9 0.49 8.6 0.56
Other Employees 9.3 0.20 8.4 0.21 10.0 0.19 9.5 0.33 9.8 0.23 10.0 0.27
Self Employed 9.3 0.22 8.3 0.30 9.9 0.22 9.2 0.34 9.3 0.26 9.5 0.44
Homemaker 9.5 0.17 9.2 0.40 10.2 0.18 10.0 0.24 9.9 0.24 10.2 0.17
Retired Persons 9.5 0.41 8.6 0.65 10.2 0.39 9.5 0.59 9.7 0.42 9.4 0.60
Daily Workers 9.1 0.24 8.2 0.32 9.8 0.23 9.0 0.43 9.7 0.27 9.9 0.35
Other category 8.7 0.25 7.5 0.30 9.5 0.26 8.5 0.31 9.1 0.32 9.3 0.53
Age Group-wise                        
Up to 25 years 8.7 0.27 7.6 0.27 9.4 0.26 8.4 0.32 9.1 0.31 8.8 0.49
25 to 30 years 9.0 0.20 8.0 0.28 9.7 0.20 8.8 0.28 9.6 0.24 9.8 0.35
30 to 35 years 9.0 0.20 8.2 0.31 9.7 0.20 9.1 0.40 9.7 0.23 9.7 0.36
35 to 40 years 9.2 0.22 8.4 0.33 9.9 0.21 9.5 0.42 9.5 0.26 9.7 0.37
40 to 45 years 9.2 0.23 8.5 0.34 9.9 0.23 9.4 0.40 9.6 0.28 9.6 0.41
45 to 50 years 9.7 0.29 9.8 0.45 10.2 0.28 10.1 0.36 9.8 0.33 10.1 0.42
50 to 55 years 9.7 0.28 9.1 0.52 10.4 0.28 10.1 0.32 9.6 0.35 9.9 0.52
55 to 60 years 10.0 0.29 9.8 0.33 10.7 0.28 10.3 0.27 9.5 0.37 9.6 0.37
60 years and above 9.5 0.31 8.9 0.58 10.3 0.28 9.8 0.47 9.8 0.33 9.9 0.42
City-wise                        
Ahmedabad 9.9 0.38 9.6 0.64 10.9 0.38 10.6 0.57 10.4 0.50 10.5 0.61
Bengaluru 5.7 0.28 4.7 0.29 6.4 0.26 5.4 0.21 7.0 0.30 6.1 0.23
Bhopal 7.5 0.57 6.9 0.79 8.6 0.59 8.6 0.66 8.5 0.93 9.5 1.13
Bhubaneswar 7.6 0.80 6.4 1.18 9.5 0.98 8.3 1.39 10.1 0.96 9.7 1.58
Chennai 9.0 0.50 8.1 0.70 9.8 0.42 9.1 0.61 10.0 0.43 10.3 0.28
Delhi 9.7 0.27 9.2 0.54 10.1 0.27 9.7 0.42 9.2 0.33 9.3 0.48
Guwahati 10.1 1.00 10.3 0.73 9.4 0.90 9.7 1.09 8.1 0.77 7.9 1.21
Hyderabad 9.4 0.38 8.4 0.83 10.6 0.36 9.9 0.74 11.1 0.35 11.5 0.85
Jaipur 6.7 0.28 6.2 0.40 7.4 0.35 7.2 0.35 8.1 0.45 8.4 0.60
Kolkata 10.7 0.42 10.4 0.27 11.3 0.45 11.0 0.71 11.5 0.49 11.9 1.46
Lucknow 8.1 0.64 7.6 0.63 9.3 0.72 8.8 0.38 9.7 0.90 10.3 0.51
Mumbai 11.7 0.38 12.1 1.45 12.2 0.36 13.5 1.59 10.7 0.42 12.2 1.33
Nagpur 8.8 0.46 8.0 0.74 10.0 0.54 9.5 0.79 9.5 0.88 9.8 0.83
Patna 7.4 0.38 6.7 0.58 7.9 0.43 7.6 0.51 7.8 0.53 7.9 0.78
Thiruvananthapuram 7.6 0.80 6.5 1.29 9.5 0.83 8.9 1.08 10.5 0.68 11.1 1.24
Chandigarh 9.4 0.71 9.1 0.59 9.0 0.50 8.9 0.46 8.9 0.55 8.6 0.57
Ranchi 7.5 0.86 6.5 1.12 7.6 1.00 7.0 1.33 7.2 1.02 6.7 1.23
Raipur 6.7 0.68 5.8 0.51 6.8 0.70 5.9 0.73 6.1 0.96 6.1 0.70
Note: The table provides estimates and standard errors for quantitative responses for September 2018 round.

Table 3: Households Expecting General Price Movements in Coherence with Movements in Price Expectations of Various Product Groups: Three Months Ahead and One Year Ahead
(Percentage of Respondents)
Survey period ended Food Non-Food Households durables Housing Cost of services
Three Months Ahead
Sep-17 66.8 65.8 56.8 60.1 64.9
Mar-18 63.7 63.2 55.6 57.8 62.7
May-18 67.5 65.6 56.6 60.0 65.0
Jun-18 65.6 64.7 53.8 60.0 63.7
Sep-18 64.4 65.3 52.8 58.6 64.3
One Year Ahead
Sep-17 72.7 69.9 60.5 67.4 69.8
Mar-18 69.0 66.3 59.6 64.3 69.2
May-18 72.4 70.8 62.5 67.4 72.1
Jun-18 71.9 71.4 60.9 67.4 71.9
Sep-18 72.2 71.5 60.0 66.5 71.4
Note: Figures are based on sample observations

Table 4(a): Cross-tabulation of Number of Respondents by Current Inflation Perception and Three Months Ahead Inflation Expectations: September 2018
Three Months Ahead Inflation Rate (per cent)
Current Inflation Rate (per cent)   <1 1-<2 2-<3 3-<4 4-<5 5-<6 6-<7 7-<8 8-<9 9-<10 10-<11 11-<12 12-<13 13-<14 14-<15 15-<16 >=16 No idea Total
<1 7 3 7 3 0 2 0 0 0 0 0 0 0 0 0 0 0 0 22
1-<2 2 39 19 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 64
2-<3 2 11 94 78 52 10 0 0 0 0 0 0 0 0 0 0 0 0 247
3-<4 3 3 10 116 105 62 7 3 4 0 2 0 0 0 0 0 1 0 316
4-<5 0 0 6 11 178 103 48 10 9 0 1 0 0 0 0 0 1 1 368
5-<6 2 5 3 18 21 426 148 195 62 4 53 1 2 0 0 2 1 5 948
6-<7 1 0 1 3 3 5 152 68 86 13 7 2 3 0 0 0 2 0 346
7-<8 1 0 2 4 4 5 6 217 89 62 48 5 1 1 1 2 0 0 448
8-<9 0 0 0 1 0 4 5 4 199 75 74 9 10 1 0 1 1 0 384
9-<10 0 0 0 2 0 0 4 2 2 103 55 24 10 2 2 4 3 0 213
10-<11 0 0 0 1 1 15 3 8 11 7 505 60 97 25 7 112 33 6 891
11-<12 0 0 0 0 0 1 0 0 0 1 4 36 10 27 6 15 4 0 104
12-<13 0 0 0 0 0 0 0 1 2 1 1 0 32 7 13 20 5 0 82
13-<14 0 0 0 0 0 0 0 0 0 0 2 1 0 11 5 5 2 0 26
14-<15 0 0 0 0 0 0 0 0 0 0 0 1 0 0 23 15 8 0 47
15-<16 0 0 0 0 0 1 0 0 0 0 5 0 2 2 4 106 95 0 215
>=16 0 0 0 1 0 5 4 0 0 0 13 0 4 0 0 20 980 12 1039
Total 18 61 142 240 366 639 377 508 464 266 770 139 171 76 61 302 1136 24 5760
Note: Figures are based on sample observations

Table 4(b): Cross-tabulation of Number of Respondents by Current Inflation Perception and One Year Ahead Inflation Expectations: September 2018
One Year Ahead Inflation Rate (per cent)
Current Inflation Rate (per cent)   <1 1-<2 2-<3 3-<4 4-<5 5-<6 6-<7 7-<8 8-<9 9-<10 10-<11 11-<12 12-<13 13-<14 14-<15 15-<16 >=16 No idea Total
<1 8 1 1 3 2 3 1 1 1 0 0 0 0 0 0 0 0 1 22
1-<2 20 14 8 15 3 1 2 0 0 0 0 0 0 0 0 0 0 1 64
2-<3 44 2 38 36 58 37 17 6 9 0 0 0 0 0 0 0 0 0 247
3-<4 34 3 2 50 49 98 27 16 14 4 11 0 1 0 0 1 5 1 316
4-<5 46 2 1 6 81 79 75 31 18 6 14 1 5 0 1 0 0 2 368
5-<6 109 1 4 9 7 230 95 155 96 34 148 12 14 4 3 16 10 1 948
6-<7 43 0 0 0 0 2 90 27 58 29 54 15 13 2 3 4 4 2 346
7-<8 45 0 1 3 1 5 4 149 52 62 58 12 29 5 5 9 8 0 448
8-<9 42 0 0 0 1 1 3 3 116 48 83 15 32 11 5 12 8 4 384
9-<10 21 0 0 0 1 0 1 0 2 69 18 29 27 8 14 10 10 3 213
10-<11 86 0 0 1 1 10 3 3 8 3 331 39 87 24 17 136 136 6 891
11-<12 13 0 0 0 0 0 0 0 1 0 0 19 8 13 12 25 13 0 104
12-<13 10 0 0 0 0 0 1 0 0 0 0 0 17 3 6 19 25 1 82
13-<14 2 0 0 0 0 0 0 0 0 1 0 0 0 7 3 6 7 0 26
14-<15 7 0 0 0 0 0 0 1 0 0 1 0 0 0 15 3 19 1 47
15-<16 24 0 0 0 0 1 0 0 0 1 4 0 0 1 0 68 113 3 215
>=16 123 0 0 1 1 3 1 0 0 0 10 0 1 1 0 15 863 20 1039
Total 677 23 55 124 205 470 320 392 375 257 732 142 234 79 84 324 1221 46 5760
Note: Figures are based on sample observations

1 The survey is conducted at regular intervals by the Reserve Bank of India. It provides useful directional information on near-term inflationary pressures and also supplements other economic indicators. However, these expectations are formed by the respondents and may reflect their own consumption pattern. Hence, these should not be treated as benchmarks for official measures of inflation.

2 As approved by the Technical Advisory Committee on Surveys (TACS), a two-stage probability sampling scheme has been implemented in place of quota sampling from the September 2018 round of the survey. Consequent changes in reporting the results of survey are stated in the footnote to the respective tables. Further, city-wise sample size has been revised in proportion to number of households of each city as per Census 2011, keeping the overall sample size 6,000.

Source: RBI Notification