This article presents the findings of
Inflation Expectations Survey of
Households for July–September 2010
quarter, the 21st round in the series. The
survey sheds light on the inflation
expectations of 4,000 households across
12 cities for the next quarter (October–
December 2010) and for the next year
(October 2010-September 2011).
The survey captures the expectations
of inflation for a respondent’s own basket
of consumption. Therefore, the inflation
rates from this survey represent the
inflation expectations of 4,000 urban
households based on their individual
consumption baskets and hence these
rates are not to be considered as predictors
of any official measure of inflation. The
households’ inflation expectations provide
useful directional information on nearterm
inflationary pressures and also
supplement other economic indicators, to
get a better indication of future inflation.
The survey findings portray that
households expect inflation to rise further
by 20 and 60 basis points during the next
one quarter (to 12.3 per cent) and the next
one year (to 12.7 per cent), respectively,
from the perceived current rate of 12.1 per
cent. Households’ expectations of general
price rise were mainly influenced by
movements in prices of food products. More
respondents expected price-rise in food,
housing and non-food products compared
to other product groups. Housewives and
Daily-wage workers expected higher
inflation rates compared to other categories.
Higher inflation expectations persisted in
Bangalore and Lucknow.
Section I: Introduction
The Reserve Bank of India has been
conducting Inflation Expectations Survey of
Households (IESH) on a quarterly basis, since
September 2005. The survey seeks qualitative
responses on price changes (general prices as
well as prices of specific product groups) in
the next three months as well as in the next
one year and quantitative responses on
current, three-month ahead and one-year
ahead inflation rates. While inflation affects
purchasing power, inflation expectations
affect people’s behaviour in ways that have a
long-term economic impact that includes
impact on actual inflation itself. Inflation
expectations of households are subjective
assessments and are based on their individual
consumption baskets and, therefore, may be
different from the official inflation numbers
released periodically by the government.
Section II: Data Coverage &
Methodology
The survey schedule that has been
designed for the IESH is a single-page schedule
(Annex 1). It has been organised into five
blocks. The first block seeks respondents’
particulars including name, contact details,
gender, age and category (occupation). The
second and third blocks seek product-wise
price expectations for three-month ahead and
one-year ahead, respectively. The fourth block
assesses the respondents’ feedback on the
Reserve Bank’s action to control inflation. The
fifth block collects the rate of inflation of the
respondent for three time points – current,
three-month ahead and one-year ahead.
II.1 Coverage
The Reserve Bank conducts this survey
in 12 cities on a quarterly basis. The major metropolitan cities, viz., Delhi, Kolkata,
Mumbai and Chennai are represented by 500
households each, while the eight other cities,
viz., Jaipur, Lucknow, Bhopal, Ahmedabad,
Patna, Guwahati, Bangalore and Hyderabad
are represented by 250 households each. The
respondents are well spread across the cities
to provide a good geographical coverage. The
male and female respondents in the group
are usually in the ratio of 3:2. The category
wise representation of the respondents is
presented in Table 1. The sample coverage is
nearly as per the target in all rounds.
II.2 Information collected
The price expectations are sought for
general prices and for five product groups
(food products, non-food products, consumer
durables, housing and services) in the survey.
The general price comprises prices of all the
product groups taken together. The options
for responses are (i) price increase more than
current rate, (ii) price increase similar to
current rate, (iii) price increase lower thancurrent rate, (iv) no change in prices and
(v) decline in prices. The first three of the five
options pertain to the respondents’
expectations on the rate of future price
increase compared to the current rate. These
expectations are sought from the respondents for three-month ahead as well as one-year
ahead period. The inflation expectations of
the respondents that represent the year-onyear
changes in prices are collected through
Block 5. The inflation rates are collected in
intervals – the lowest being ‘less than 1 per
cent’ and the highest being ’16 per cent and
above’ with 100 basis point size for all
intermediate classes. From the latest survey
round (round 21), information on the
respondents’ awareness about the Reserve
Bank’s actions to control inflation as well as
the impact of the Reserve Bank’s action on
inflation are also obtained.
Table 1: Respondents Profile (Category): Share in Total Sample |
Respondents’ Category |
Sample |
Target |
Financial Sector Employees |
9.5 |
10.0 |
Other Employees |
16.3 |
15.0 |
Self-employed |
22.7 |
20.0 |
Housewives |
28.6 |
30.0 |
Retired Persons |
8.6 |
10.0 |
Daily Workers |
8.5 |
10.0 |
Other Category |
5.9 |
5.0 |
Note: Sample proportion above is for the September 2010 survey. |
Section III: Survey Results
III.1 General Price Expectations
The survey results depict that the
percentages of respondents expecting
increase in general prices for both threemonth
ahead and one-year ahead have been
rising since March 2008. For three-month
ahead, the percentage of respondents who
expect this price increase to be ‘higher than current rate’ have also risen consistently
from March 2009 to December 2009. Though
this percentage declined during March 2010,
the same has risen up in June 2010 and has
decreased marginally in the current survey
round (Table 2).
Table 2: General Price Expectations |
Round No./Survey Period → |
3-month Ahead (percentage of respondents) |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
Options |
Dec-08 |
Mar-09 |
Jun-09 |
Sep-09 |
Dec-09 |
Mar-10 |
Jun-10 |
Sep-10 |
Prices will increase |
89.8 |
92.0 |
93.1 |
95.8 |
97.4 |
95.7 |
95.3 |
96.5 |
Price increase more than current rate |
52.9 |
54.9 |
63.5 |
72.2 |
74.6 |
66.9 |
72.7 |
72.2 |
Price increase similar to current rate |
20.1 |
22.4 |
20.7 |
18.4 |
16.6 |
20.0 |
20.0 |
21.0 |
Price increase less than current rate |
16.8 |
14.8 |
8.9 |
5.1 |
6.2 |
8.8 |
2.6 |
3.3 |
No change in prices |
5.7 |
6.9 |
6.1 |
3.7 |
2.4 |
3.4 |
4.2 |
2.9 |
Decline in price |
4.5 |
1.1 |
0.9 |
0.6 |
0.3 |
0.9 |
0.5 |
0.6 |
Options |
1-year Ahead (percentage of respondents) |
Prices will increase |
90.6 |
95.6 |
93.7 |
96.3 |
96.3 |
96.5 |
95.2 |
95.6 |
Price increase more than current rate |
59.7 |
64.7 |
62.8 |
69.5 |
68.2 |
62.8 |
70.8 |
70.4 |
Price increase similar to current rate |
18.0 |
15.9 |
18.5 |
17.3 |
15.2 |
19.8 |
18.7 |
19.7 |
Price increase less than current rate |
12.9 |
15.0 |
12.4 |
9.5 |
12.9 |
13.9 |
5.7 |
5.6 |
No change in prices |
3.1 |
3.3 |
5.3 |
3.1 |
3.1 |
2.6 |
3.8 |
3.5 |
Decline in price |
6.3 |
1.1 |
0.9 |
0.7 |
0.6 |
0.9 |
1.1 |
0.9 |
III.2 Product group-wise Price
Expectations
The product group-wise price
expectations based on Block 3 of the survey
schedule are given in Statement I. The
percentage of respondents expecting price rise
in food products in the short-term (threemonth
ahead) has gone up, however, the
proportion of respondents expecting prices to
increase at more than current rate has
decreased marginally compared to those of the
previous round. In case of long-term (one-year
ahead) price expectations, the percentage of
respondents expecting price increase has
increased marginally and those expecting
price increase at more than current rate has
decreased marginally. In case of non-food
products, both the percentages expecting price increase as well as price increase at more than
current rate have risen as compared to the
previous quarter. For Household Durables also,
more respondents are expecting price rise
compared to the previous quarter. The
percentage of respondents expecting price
increase in Household Durables, which were
usually below 80 per cent, has moved up and
it has been in the 80-90 per cent bracket for
the last seven quarters. There is marginal
decrease in the proportion of respondents
expecting price increase in Housing. But for
Cost of services, there is marginal increase in
this proportion.
III.3 Coherence between General
Prices and Product Groups’ Prices
General Price expectations are
determined by the price expectations in
totality of various product groups. It can be
observed that price expectations of certain
product groups greatly influence the General
Price expectations than other products.
Therefore, a measure of coherence between
General Prices and prices of various product
groups was derived based on the total
percentages of respondents who expect
identical movements in General Price and prices of various product groups. This degree
of coherence between General Prices and
prices of various product groups for threemonth
ahead and one-year ahead is depicted
in Tables 3 and 4.
It is clear that the General Price
expectations are more in tune with Food Price
expectations, as compared to other product
groups. This association was lowest for
Household Durables. This may point out the
fact that respondents assign the highest
priority to food prices when they think about
the price movements in general. In the current
round of the survey, it is seen that about 91.4
per cent of the respondents have set their
general price expectations in tandem with
food price expectations whereas 86.1 per cent
respondents viewed identical movements in
General Prices and Non-Food Prices, for threemonth
ahead (Table 3). For one-year ahead,
these percentages are 93.4 and 88.0,
respectively (Table 4).
Table 3: Percentage of Respondents Expecting General Price Movements in Coherence with Movements in Price Expectations of Various Product groups – 3-month Ahead |
Round
No. |
Survey
Quarter |
Food |
Non-
Food |
House-
holds
durables |
Hous-
ing |
Cost
of services |
14 |
Dec-08 |
88.9 |
85.1 |
60.9 |
69.0 |
70.3 |
15 |
Mar-09 |
85.4 |
85.3 |
62.8 |
73.0 |
73.9 |
16 |
Jun-09 |
87.0 |
79.3 |
59.4 |
72.0 |
76.7 |
17 |
Sep-09 |
89.1 |
81.3 |
56.5 |
78.1 |
82.2 |
18 |
Dec-09 |
88.3 |
83.6 |
62.3 |
82.7 |
79.3 |
19 |
Mar-10 |
87.4 |
81.4 |
66.5 |
78.1 |
76.6 |
20 |
Jun-10 |
89.9 |
82.4 |
63.6 |
80.2 |
80.8 |
21 |
Sep-10 |
91.4 |
86.1 |
64.8 |
79.2 |
76.7 |
Table 4: Percentage of Respondents Expecting General Price Movements in Coherence withMovements in Price Expectations of Various Product Groups – 1-year Ahead |
Round
No. |
Survey
Quarter |
Food |
Non-
Food |
House-
holds durables |
Hous-
ing |
Cost
of services |
14 |
Dec-08 |
91.8 |
88.3 |
63.4 |
70.9 |
74.4 |
15 |
Mar-09 |
89.1 |
88.1 |
65.3 |
79.4 |
74.8 |
16 |
Jun-09 |
89.2 |
82.2 |
61.4 |
76.8 |
78.5 |
17 |
Sep-09 |
91.9 |
85.8 |
65.0 |
78.9 |
82.3 |
18 |
Dec-09 |
91.1 |
88.4 |
69.0 |
82.8 |
79.3 |
19 |
Mar-10 |
89.9 |
83.6 |
67.3 |
79.7 |
76.2 |
20 |
Jun-10 |
91.7 |
83.2 |
67.2 |
79.4 |
81.1 |
21 |
Sep-10 |
93.4 |
88.0 |
66.8 |
81.0 |
76.3 |
III.4 Inflation expectations
The inflation expectations are collected
through quantitative Block 5 of the survey
schedule. The perception of current inflation rate and expectations of three-month ahead
and one-year ahead inflation since Round 5
(September 2006) are shown in Table 5 and
Chart 1. It represents the average inflation
rate of 4,000 respondents based on individual
consumption baskets. The movement of
inflation expectations shows that the future
inflation expectations are usually higher than
the current inflation values. In the current
round of the survey (i.e. September 2010),
the average rates of inflation for current,
three-month ahead and one-year ahead are
12.1 per cent, 12.3 per cent and 12.7 per cent
respectively, higher than 11.1 per cent, 11.4
per cent and 11.9 per cent measured in the
last survey round (i.e. June 2010). It can be
noticed that the inflation rates obtained in
the current survey round have approached
the peak inflation rates observed in
September 2008. These inflation rates do not
attempt to forecast the quantum of future
inflation, but give useful inputs on
directional movements of future inflation.
It may be seen from Chart 1 that the
short-term (three-month ahead) expectations
of inflation lie between current and longterm
(one-year ahead) inflation.
Chart 2 depicts the household inflation
expectations along with the official inflation
measures based on Wholesale Price Index
(WPI) – All commodities and Consumer Price
Index for Industrial Workers (CPI-IW). It
shows that for a large part of the survey
history, the households’ inflation
Survey Expectation Current 3-Months 1-Year expectations remained between the WPI and CPI-IW inflations. However, in the current
survey round, household inflation
expectations are higher than the official
inflation rates. It can be seen that even
though the official indicators are moving in
the downward direction, expectations are
showing an upward swing.
Table 5: Household Inflation Expectations – Current, 3-month Ahead and 1-year Ahead |
Survey
Quarter |
Expectation
period |
Current |
3-Months
Ahead |
1-Year
Ahead |
Sep-06 |
Oct-Dec06 |
4.7 |
4.8 |
5.6 |
Dec-06 |
Jan-Mar07 |
5.1 |
5.2 |
5.8 |
Mar-07 |
Apr-Jun07 |
5.9 |
5.9 |
6.3 |
Jun-07 |
Jul-Sep07 |
5.7 |
6.1 |
6.5 |
Sep-07 |
Oct-Dec07 |
4.8 |
5.3 |
6.0 |
Dec-07 |
Jan-Mar08 |
4.5 |
5.2 |
5.9 |
Mar-08 |
Apr-Jun08 |
4.9 |
5.4 |
6.3 |
Jun-08 |
Jul-Sep08 |
6.9 |
7.5 |
7.9 |
Sep-08 |
Oct-Dec08 |
12 |
12.8 |
13.5 |
Dec-08 |
Jan-Mar09 |
9.3 |
8.9 |
9.6 |
Mar-09 |
Apr-Jun09 |
5.2 |
5.3 |
6.2 |
Jun-09 |
July-Sep09 |
5.8 |
6.3 |
6.7 |
Sep-09 |
Oct-Dec09 |
8.2 |
8.7 |
9.2 |
Dec-09 |
Jan-Mar10 |
11.1 |
11.6 |
11.9 |
Mar-10 |
Apr-Jun10 |
10.3 |
10.6 |
11.0 |
Jun-10 |
July-Sep10 |
11.1 |
11.4 |
11.9 |
Sep-10 |
Oct-Dec10 |
12.1 |
12.3 |
12.7 |
 |
 |
Table 6: Volatility in Responses in Various Rounds |
Round
No. |
Survey
Quarter |
Current
Inflation rate |
Inflation
rate 3-months Ahead |
Inflation
rate 1-year Ahead |
Mean |
Std.Dev. |
Mean |
Std.Dev. |
Mean |
Std. Dev. |
12 |
Jun-08 |
6.9 |
1.4 |
7.5 |
1.4 |
7.9 |
1.5 |
13 |
Sep-08 |
11.3 |
2.0 |
11.6 |
3.2 |
12.4 |
3.6 |
14 |
Dec-08 |
9.3 |
1.9 |
8.9 |
3.5 |
9.6 |
3.9 |
15 |
Mar-09 |
5.2 |
1.9 |
5.3 |
2.6 |
6.2 |
2.7 |
16 |
Jun-09 |
5.8 |
4.4 |
6.3 |
4.6 |
6.7 |
4.7 |
17 |
Sep-09 |
8.2 |
6.0 |
8.7 |
6.0 |
9.2 |
5.9 |
18 |
Dec-09 |
11.1 |
4.9 |
11.6 |
4.9 |
11.9 |
5.1 |
19 |
Mar-10 |
10.3 |
4.4 |
10.6 |
4.7 |
11.0 |
4.8 |
20 |
Jun-10 |
11.1 |
3.6 |
11.4 |
4.1 |
11.9 |
4.2 |
21 |
Sep-10 |
12.1 |
3.2 |
12.3 |
3.6 |
12.7 |
3.8 |
III.5 Volatility in Responses
Volatility in responses is measured
through standard deviation. Over different
rounds, it can be seen that the standard
deviation is lower for current inflation rate
as compared to three-month ahead and oneyear
ahead (Table 6).
The total variability in responses for
inflation expectations was elucidated by
different classificatory factors (viz., Gender,
Age-group, City and Category) of
respondents over different rounds. An
ANOVA (Analysis of Variance) carried out
over different rounds revealed that ‘City’
has been a significant source of variation in
all rounds. This may be due to variation in
consumption baskets across the cities.
III.6 Gender-wise Inflation
In the current round of survey, females
expected higher inflation rates compared
to their male counterparts (Table 8).
However, there is no significant difference
between male and female respondents in
terms of the consistency in responses over
various survey rounds and for current,
three-month ahead and one-year ahead
periods.
Table 7: Factors that Explain the Total Variability |
Round
No. |
Survey
Quarter |
Current |
3-month Ahead |
1-year Ahead |
12 |
Jun-08 |
City, Category, Age |
City, Category, Age |
City, Age |
13 |
Sep-08 |
City |
City, Category, Age |
City, Age |
14 |
Dec-08 |
City, Gender, Age |
City, Gender, Category |
City, Category |
15 |
Mar-09 |
City, Category |
City, Gender, Category |
City, Category |
16 |
Jun-09 |
City, Gender, Category, Age |
City, Gender, Category |
City, Category, Age |
17 |
Sep-09 |
City, Age |
City, Age |
City, Age |
18 |
Dec-09 |
City, Category, Age |
City, Age |
City |
19 |
Mar-10 |
City, Category, Age |
City, Category |
City, Category |
20 |
Jun-10 |
City, Category, Age |
City, Category, Age |
City, Category, Age |
21 |
Sep-10 |
City, Gender, Category, Age |
City, Gender, Category |
City, Category |
Table 8: Gender-wise Inflation Expectations for September 2010 Survey Round |
Gender |
Current |
3-month Ahead |
1-year Ahead |
Mean |
Std.Dev. |
Mean |
Std.Dev. |
Mean |
Std.Dev. |
Male |
11.94 |
3.18 |
12.22 |
3.65 |
12.69 |
3.70 |
Female |
12.23 |
3.21 |
12.48 |
3.62 |
12.73 |
3.95 |
III.7 Category-wise Inflation
The category of respondents indicates
their occupation status. For the latest survey
round, Daily Workers and Housewives
reported higher inflation expectations
whereas Financial Sector Employees
reported the lowest inflation rates (Table 9).
Table 9: Category-wise Inflation Expectations for September 2010 Survey Round |
Category of Respondent |
Current |
3-months Ahead |
1-year Ahead |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Financial Sector Employees |
11.61 |
3.21 |
11.80 |
3.81 |
12.01 |
4.16 |
Other Employees |
11.87 |
3.28 |
12.19 |
3.68 |
12.82 |
3.57 |
Self-Employed |
12.01 |
3.21 |
12.23 |
3.77 |
12.76 |
3.68 |
Housewife |
12.31 |
3.23 |
12.59 |
3.58 |
12.77 |
3.98 |
Retired persons |
12.28 |
2.83 |
12.44 |
3.55 |
12.57 |
4.03 |
Daily-wage Workers |
12.39 |
3.22 |
12.68 |
3.44 |
13.16 |
3.39 |
Other Category |
11.34 |
2.95 |
11.82 |
3.29 |
12.54 |
3.34 |
III.8 Age group-wise Inflation
The survey covers only the adult
respondents of 18 years or more. During the
current survey round, the respondents in
the age group ’60 years and above’ have
reported the highest inflation rates for
current and three-month ahead periods
(Table 10). The one-year ahead inflation
expectations were higher for the age-groups ’35-40 years’ and ’40-45 years’. However,
over the survey rounds, no age-specific consistency is observed in inflation
expectations.
Table 10: Age group-wise Inflation Expectations for September 2010 Survey Round |
Category of Respondent |
Current |
3-months ahead |
1-year ahead |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Up to 25 years |
11.83 |
3.16 |
12.42 |
3.22 |
12.81 |
3.51 |
25 to 30 years |
11.56 |
3.32 |
12.01 |
3.53 |
12.49 |
3.76 |
30 to 35 years |
11.88 |
3.16 |
12.30 |
3.47 |
12.60 |
3.63 |
35 to 40 years |
12.13 |
3.21 |
12.52 |
3.48 |
12.85 |
3.51 |
40 to 45 years |
12.24 |
3.28 |
12.33 |
3.89 |
12.84 |
3.87 |
45 to 50 years |
12.09 |
3.13 |
12.06 |
3.98 |
12.62 |
3.96 |
50 to 55 years |
12.41 |
3.16 |
12.42 |
3.80 |
12.54 |
4.35 |
55 to 60 years |
12.29 |
3.18 |
12.21 |
4.15 |
12.84 |
3.90 |
60 years & above |
12.55 |
2.96 |
12.60 |
3.69 |
12.74 |
4.11 |
III.9 City-wise Inflation
Significant variations are observed in
the inflation expectations across different
cities. These variations may be attributed
to the divergence in consumption pattern
between cities. In the latest round of survey,
inflation expectations were found to be
highest in Bangalore and lowest in
Ahmedabad (Table 11). The variability in
responses was higher in Delhi and Mumbai
and least in Guwahati.
Table 11: City-wise Inflation Expectations for September 2010 Survey Round |
Category of Respondent |
Current |
3-months Ahead |
1-year Ahead |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Guwahati |
10.58 |
0.27 |
11.48 |
0.40 |
12.32 |
0.60 |
Patna |
12.00 |
1.76 |
12.83 |
1.82 |
12.88 |
1.80 |
Kolkata |
10.74 |
1.24 |
10.21 |
3.17 |
10.29 |
3.83 |
Lucknow |
14.44 |
2.47 |
15.14 |
2.01 |
15.07 |
2.13 |
Delhi |
11.19 |
3.46 |
11.65 |
4.14 |
12.55 |
4.29 |
Jaipur |
13.68 |
2.63 |
14.43 |
2.39 |
14.85 |
3.25 |
Ahmedabad |
6.86 |
1.78 |
8.29 |
1.93 |
10.16 |
2.24 |
Mumbai |
14.78 |
3.18 |
13.15 |
5.66 |
13.92 |
5.09 |
Bhopal |
10.44 |
0.67 |
11.43 |
1.18 |
12.33 |
1.85 |
Hyderabad |
13.65 |
2.69 |
14.24 |
2.36 |
14.31 |
2.45 |
Bangalore |
15.88 |
1.63 |
16.03 |
1.34 |
16.23 |
0.96 |
Chennai |
10.95 |
1.86 |
11.60 |
2.05 |
10.73 |
3.52 |
II.10 Cross-tabulation of Current
and Future Inflations
It may be observed that 80.9 per cent
respondents perceived double digit current inflation. Similarly, 83.1 per cent and 85.6
per cent of the respondents, respectively,
expected the three-month ahead inflation
and one-year ahead inflation in doubledigit
figures. A cross-tabulation of the
current inflation perception with the
future inflation expectations points out that among the 80.9 per cent of
respondents who perceived the current
inflation in double-digit, 95.0 and 93.1 per
cent respondents expected that it would
remain in the same band for three-month
ahead and one-year ahead, respectively,
(Table 12 & Table 13).
Table 12: Cross Tabulation of Current and 3-month Ahead Inflation |
|
3-Months Ahead Inflation Rate |
< 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 |
Current inflation rate |
< 1 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
1-2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2-3 |
|
|
|
1 |
2 |
1 |
1 |
|
|
|
|
|
|
|
|
|
|
|
5 |
3-4 |
|
|
2 |
2 |
3 |
4 |
|
2 |
|
|
|
|
|
|
|
|
|
|
13 |
4-5 |
1 |
|
|
1 |
12 |
10 |
19 |
3 |
|
|
1 |
|
|
|
|
|
|
|
47 |
5-6 |
3 |
|
|
|
2 |
17 |
12 |
27 |
2 |
1 |
3 |
|
|
1 |
|
|
|
|
68 |
6-7 |
3 |
|
|
|
|
1 |
10 |
56 |
26 |
4 |
2 |
1 |
|
1 |
|
|
|
|
104 |
7-8 |
4 |
|
|
|
|
1 |
|
23 |
77 |
36 |
17 |
2 |
|
1 |
|
|
|
|
161 |
8-9 |
9 |
|
|
|
|
|
|
1 |
26 |
36 |
20 |
4 |
|
|
|
1 |
|
8 |
105 |
9-10 |
11 |
|
|
|
|
|
|
1 |
7 |
54 |
137 |
24 |
20 |
4 |
|
|
|
2 |
260 |
10-11 |
35 |
|
|
|
|
|
1 |
2 |
5 |
44 |
274 |
671 |
84 |
30 |
10 |
9 |
2 |
2 |
1169 |
11-12 |
8 |
|
|
|
|
|
|
|
|
1 |
14 |
109 |
201 |
36 |
10 |
1 |
1 |
2 |
383 |
12-13 |
4 |
|
|
|
|
|
|
|
|
|
|
12 |
64 |
139 |
46 |
9 |
4 |
2 |
280 |
13-14 |
6 |
|
|
|
|
|
|
|
|
|
1 |
1 |
7 |
47 |
97 |
19 |
1 |
|
179 |
14-15 |
2 |
|
|
|
|
|
|
|
|
|
|
|
1 |
3 |
53 |
121 |
12 |
1 |
193 |
15-16 |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
1 |
4 |
27 |
69 |
|
103 |
>= 16 |
52 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
6 |
869 |
1 |
929 |
Total |
141 |
|
2 |
4 |
19 |
34 |
43 |
115 |
144 |
176 |
469 |
824 |
377 |
263 |
220 |
193 |
958 |
18 |
4000 |
Table 13: Cross Tabulation of Current and 1-year Ahead Inflation |
|
1-year Ahead Inflation Rate |
< 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 |
Current inflation rate |
< 1 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
1-2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2-3 |
|
|
|
|
1 |
1 |
2 |
|
|
|
|
|
|
|
|
|
1 |
|
5 |
3-4 |
|
|
1 |
2 |
2 |
2 |
|
4 |
1 |
1 |
|
|
|
|
|
|
|
|
13 |
4-5 |
1 |
|
|
|
8 |
3 |
5 |
9 |
14 |
|
3 |
|
1 |
|
|
|
1 |
2 |
47 |
5-6 |
2 |
|
|
2 |
3 |
20 |
2 |
4 |
11 |
10 |
8 |
|
1 |
1 |
|
|
1 |
3 |
68 |
6-7 |
4 |
|
|
|
|
2 |
14 |
4 |
11 |
3 |
50 |
10 |
3 |
|
|
|
3 |
|
104 |
7-8 |
4 |
|
|
|
|
1 |
7 |
25 |
7 |
28 |
25 |
45 |
14 |
1 |
1 |
|
3 |
|
161 |
8-9 |
7 |
|
|
|
|
|
|
2 |
26 |
15 |
24 |
4 |
16 |
|
|
1 |
2 |
8 |
105 |
9-10 |
11 |
|
|
|
|
|
1 |
2 |
18 |
49 |
29 |
81 |
26 |
10 |
11 |
7 |
8 |
7 |
260 |
10-11 |
60 |
|
|
|
|
1 |
1 |
6 |
12 |
53 |
231 |
214 |
403 |
65 |
54 |
28 |
29 |
12 |
1169 |
11-12 |
12 |
|
|
|
|
|
|
|
|
3 |
30 |
105 |
56 |
106 |
38 |
19 |
10 |
4 |
383 |
12-13 |
18 |
|
|
|
|
|
|
|
|
|
|
22 |
61 |
42 |
64 |
48 |
16 |
9 |
280 |
13-14 |
12 |
|
|
|
|
|
|
|
|
|
1 |
3 |
19 |
43 |
51 |
33 |
16 |
1 |
179 |
14-15 |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
1 |
48 |
82 |
58 |
1 |
193 |
15-16 |
3 |
|
|
|
|
|
|
1 |
|
|
|
1 |
1 |
|
3 |
24 |
69 |
1 |
103 |
>= 16 |
38 |
|
|
|
|
|
|
|
|
|
1 |
|
|
|
2 |
4 |
880 |
4 |
929 |
Total |
176 |
|
1 |
4 |
14 |
30 |
32 |
57 |
100 |
162 |
402 |
485 |
601 |
269 |
272 |
246 |
1097 |
52 |
4000 |
III.11 Awareness about Reserve Bank
of India’s actions to Control Inflation
In the latest round of the survey, an
additional block (Block 4) was added to the
survey schedule to determine the awareness
of public about the Reserve Bank’s actions
on inflation control. There are two questions
in this block. The first one checks whether
the respondent is aware that the Reserve Bank
is taking necessary actions to control inflation
whereas the second one determines whether the respondent thinks that the Reserve Bank’s
action has got any impact on inflation. The
responses for the latest survey round are
displayed in Chart 3.
It can be seen that 30 per cent of the
respondents felt that the Reserve Bank is
taking necessary action to control inflation.
Out of these 30 per cent respondents, 65 per
cent are aware that the Reserve Bank’s action
has got an impact on inflation.
The category-wise distribution of the
responses based on ‘Block 4’ points out that
the awareness on both the Reserve Bank’s
action on inflation control as well as its
impact was the highest among Financial
Sector Employees and it was least in case of
Daily Workers and Housewives (Chart 4).
The category-wise distribution of the
responses of ‘the impact of the Reserve
Bank’s action on inflation control’ for the
30 per cent respondents who felt that the
Reserve Bank is taking necessary action to
control inflation is depicted in Table 14.
Table 14: Category-wise Responses on the Impact of the Reserve Bank’s actionon Inflation Control |
Category |
Impact of the Reserve Bank’s action on Inflation Control (per cent of respondents) |
Yes |
No |
No Idea |
Financial Sector |
|
|
|
Employees |
64.22 |
22.06 |
13.73 |
Other Employees |
66.97 |
24.31 |
8.72 |
Self-employed |
68.16 |
20.60 |
11.24 |
Housewives |
61.76 |
23.53 |
14.71 |
Retired Persons |
60.00 |
26.96 |
13.04 |
Daily Workers |
66.13 |
25.81 |
8.06 |
Other Category |
63.33 |
24.44 |
12.22 |
Section IV: A Bootstrap Confidence
Interval for Inflation Expectations
In the previous sections, the average
rates of inflation expectations are
presented. Using the Bootstrap-resampling
method, interval estimates of the average
inflation expectations of households are
presented, so as to give a clearer picture of
the error associated with the estimates of
households’ inflation expectations.
The Bootstrap is a re-sampling method
for statistical inference. Bootstrapping is a
powerful technique in the present era of high
computing, wherein the sampling
distribution of a statistic can be obtained
without any knowledge of the exact
distribution of the population variable under
study. Through Bootstrapping, a confidence
interval of not only population mean μ but
also the population median and other
parameters can be obtained. It is commonly
used to estimate confidence intervals.
Drawing 10,000 resamples using Simple
Random Sampling with Replacement from
the sample of the survey, 99 per cent
Bootstrap confidence intervals for mean have been obtained. The results are presented in
Table 15. It is observed that the exercise leads
to a confidence interval with a small width
indicating that the point estimates are quite
precise for estimating the population means
of households’ expectations of inflation.
Table 15: 99 per cent Bootstrap Confidence
Intervals (B C I) based on 10,000 Resamples |
Current |
3-month ahead |
1-year ahead |
99% BCI for
Mean |
Inte-
rval
width |
99% BCI for
Mean |
Inte-
rval
width |
99% BCI for
Mean |
Inte-
rval
width |
(11.92, 12.18) |
0.26 |
(12.17, 12.47) |
0.30 |
(12.55, 12.86) |
0.31 |
Statement 1: Percentage of Respondents – Product Group-wise Expectations of Prices for 3-month Ahead and 1-year Ahead |
1 General Prices |
Round No./Survey Period → |
3-Months Ahead (Percentage of Respondents) |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
Options |
Sep-08 |
Dec-08 |
Mar-09 |
Jun-09 |
Sep-09 |
Dec-09 |
Mar-10 |
Jun-10 |
Sep-10 |
Prices will increase |
95.3 |
89.8 |
92.0 |
93.1 |
95.8 |
97.4 |
95.7 |
95.3 |
96.5 |
Price increase more than current rate |
66.4 |
52.9 |
54.9 |
63.5 |
72.2 |
74.6 |
66.9 |
72.7 |
72.2 |
Price increase similar to current rate |
19.9 |
20.1 |
22.4 |
20.7 |
18.4 |
16.6 |
20.0 |
20.0 |
21.0 |
Price increase less than current rate |
9.0 |
16.8 |
14.8 |
8.9 |
5.1 |
6.2 |
8.8 |
2.6 |
3.3 |
No change in prices |
3.4 |
5.7 |
6.9 |
6.1 |
3.7 |
2.4 |
3.4 |
4.2 |
2.9 |
Decline in price |
1.4 |
4.5 |
1.1 |
0.9 |
0.6 |
0.3 |
0.9 |
0.5 |
0.6 |
Options |
1-Year Ahead (Percentage of Respondents) |
Prices will increase |
95.2 |
90.6 |
95.6 |
93.7 |
96.3 |
96.3 |
96.5 |
95.2 |
95.6 |
Price increase more than current rate |
69.6 |
59.7 |
64.7 |
62.8 |
69.5 |
68.2 |
62.8 |
70.8 |
70.4 |
Price increase similar to current rate |
16.3 |
18.0 |
15.9 |
18.5 |
17.3 |
15.2 |
19.8 |
18.7 |
19.7 |
Price increase less than current rate |
9.3 |
12.9 |
15.0 |
12.4 |
9.5 |
12.9 |
13.9 |
5.7 |
5.6 |
No change in prices |
3.2 |
3.1 |
3.3 |
5.3 |
3.1 |
3.1 |
2.6 |
3.8 |
3.5 |
Decline in price |
1.8 |
6.3 |
1.1 |
0.9 |
0.7 |
0.6 |
0.9 |
1.1 |
0.9 |
2 Food Prices |
Round No./Survey Period → |
3-Months Ahead (Percentage of Respondents) |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
Options |
Sep-08 |
Dec-08 |
Mar-09 |
Jun-09 |
Sep-09 |
Dec-09 |
Mar-10 |
Jun-10 |
Sep-10 |
Prices will increase |
96.0 |
90.9 |
93.6 |
94.6 |
96.3 |
98.0 |
95.9 |
95.8 |
96.7 |
Price increase more than current rate |
69.7 |
53.5 |
58.6 |
64.5 |
76.1 |
81.1 |
70.4 |
74.9 |
74.7 |
Price increase similar to current rate |
17.8 |
19.7 |
23.3 |
21.5 |
15.0 |
11.7 |
15.5 |
17.7 |
18.0 |
Price increase less than current rate |
8.5 |
17.8 |
11.8 |
8.6 |
5.2 |
5.3 |
10.0 |
3.2 |
4.0 |
No change in prices |
2.6 |
5.3 |
5.6 |
4.6 |
3.0 |
1.4 |
3.1 |
3.5 |
2.3 |
Decline in price |
1.5 |
3.8 |
0.8 |
0.9 |
0.8 |
0.6 |
1.0 |
0.7 |
1.0 |
Options |
1-Year Ahead (Percentage of Respondents) |
Prices will increase |
95.5 |
91.4 |
96.6 |
94.7 |
96.2 |
96.5 |
96.8 |
95.6 |
95.7 |
Price increase more than current rate |
72.8 |
60.3 |
66.2 |
63.6 |
71.0 |
72.1 |
65.9 |
72.8 |
71.7 |
Price increase similar to current rate |
14.0 |
17.4 |
18.1 |
18.9 |
15.2 |
11.9 |
16.5 |
16.9 |
17.8 |
Price increase less than current rate |
8.7 |
13.7 |
12.4 |
12.2 |
10.0 |
12.5 |
14.5 |
5.9 |
6.2 |
No change in prices |
2.9 |
2.9 |
2.7 |
4.5 |
2.9 |
2.7 |
2.3 |
3.3 |
3.2 |
Decline in price |
1.8 |
5.8 |
0.7 |
0.8 |
0.9 |
0.9 |
0.9 |
1.1 |
1.1 |
3 Non-Food Prices |
Round No./Survey Period → |
3-Months Ahead (Percentage of Respondents) |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
Options |
Sep-08 |
Dec-08 |
Mar-09 |
Jun-09 |
Sep-09 |
Dec-09 |
Mar-10 |
Jun-10 |
Sep-10 |
Prices will increase |
93.6 |
88.6 |
91.0 |
91.4 |
94.7 |
95.8 |
94.0 |
92.9 |
95.4 |
Price increase more than current rate |
58.0 |
47.5 |
48.6 |
51.2 |
59.3 |
63.1 |
57.4 |
60.1 |
64.4 |
Price increase similar to current rate |
24.1 |
23.3 |
25.5 |
28.4 |
27.1 |
24.8 |
28.0 |
29.4 |
27.3 |
Price increase less than current rate |
11.5 |
17.8 |
17.0 |
11.8 |
8.3 |
7.9 |
8.7 |
3.4 |
3.7 |
No change in prices |
4.9 |
6.6 |
7.8 |
7.7 |
4.7 |
3.7 |
4.8 |
6.3 |
3.9 |
Decline in price |
1.6 |
4.9 |
1.2 |
1.0 |
0.7 |
0.5 |
1.2 |
0.9 |
0.7 |
Options |
1-Year Ahead (Percentage of Respondents) |
Prices will increase |
92.9 |
89.3 |
94.6 |
91.9 |
95.2 |
94.6 |
94.7 |
92.8 |
94.6 |
Price increase more than current rate |
61.0 |
54.0 |
57.5 |
53.1 |
59.6 |
60.7 |
53.0 |
59.7 |
64.0 |
Price increase similar to current rate |
20.8 |
21.8 |
20.4 |
25.0 |
23.6 |
20.7 |
27.6 |
26.4 |
24.9 |
Price increase less than current rate |
11.1 |
13.5 |
16.7 |
13.8 |
12.1 |
13.2 |
14.1 |
6.7 |
5.7 |
No change in prices |
4.8 |
4.1 |
4.1 |
7.3 |
4.0 |
4.6 |
4.2 |
5.9 |
4.4 |
Decline in price |
2.3 |
6.6 |
1.4 |
0.8 |
0.8 |
0.8 |
1.1 |
1.3 |
1.0 |
Statement 1: Percentage of Respondents – Product Group-wise Expectations of Prices for 3-month Ahead and 1-year Ahead(Concld.) |
4 Prices of Household durables |
Round No./Survey Period → |
3-Months Ahead (Percentage of Respondents) |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
Options |
Sep-08 |
Dec-08 |
Mar-09 |
Jun-09 |
Sep-09 |
Dec-09 |
Mar-10 |
Jun-10 |
Sep-10 |
Prices will increase |
72.4 |
78.2 |
82.5 |
80.0 |
86.8 |
87.7 |
86.4 |
87.1 |
89.7 |
Price increase more than current rate |
27.9 |
32.6 |
33.2 |
37.2 |
38.4 |
45.5 |
44.1 |
45.1 |
45.8 |
Price increase similar to current rate |
23.3 |
24.6 |
24.2 |
26.3 |
30.5 |
23.4 |
27.2 |
30.5 |
32.9 |
Price increase less than current rate |
21.2 |
21.0 |
25.2 |
16.5 |
18.0 |
18.9 |
15.1 |
11.6 |
11.0 |
No change in prices |
14.4 |
12.9 |
14.6 |
15.7 |
11.0 |
9.5 |
8.8 |
9.1 |
6.3 |
Decline in price |
13.4 |
9.0 |
2.9 |
4.4 |
2.2 |
2.9 |
4.8 |
3.8 |
4.1 |
Options |
1-Year Ahead (Percentage of Respondents) |
Prices will increase |
73.1 |
79.1 |
84.6 |
80.4 |
88.7 |
87.8 |
85.2 |
87.2 |
89.0 |
Price increase more than current rate |
30.4 |
38.6 |
40.1 |
38.4 |
43.3 |
45.5 |
43.2 |
46.6 |
46.3 |
Price increase similar to current rate |
22.7 |
21.5 |
22.4 |
24.3 |
28.2 |
22.1 |
25.4 |
30.1 |
31.8 |
Price increase less than current rate |
20.0 |
19.0 |
22.1 |
17.7 |
17.3 |
20.3 |
16.6 |
10.6 |
11.0 |
No change in prices |
13.4 |
12.1 |
11.2 |
16.2 |
9.1 |
8.5 |
9.6 |
8.0 |
6.7 |
Decline in price |
13.5 |
8.8 |
4.2 |
3.5 |
2.2 |
3.7 |
5.3 |
4.8 |
4.3 |
5 Housing Prices |
Round No./Survey Period → |
3-Months Ahead (Percentage of Respondents) |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
Options |
Sep-08 |
Dec-08 |
Mar-09 |
Jun-09 |
Sep-09 |
Dec-09 |
Mar-10 |
Jun-10 |
Sep-10 |
Prices will increase |
90.9 |
88.4 |
89.8 |
92.4 |
93.8 |
96.1 |
95.2 |
96.1 |
96.0 |
Price increase more than current rate |
64.4 |
49.7 |
46.2 |
55.9 |
64.4 |
70.8 |
60.4 |
70.8 |
64.6 |
Price increase similar to current rate |
20.2 |
20.8 |
26.4 |
25.4 |
22.0 |
19.8 |
25.4 |
21.0 |
24.8 |
Price increase less than current rate |
6.3 |
17.9 |
17.2 |
11.1 |
7.4 |
5.6 |
9.5 |
4.3 |
6.7 |
No change in prices |
6.0 |
6.8 |
8.3 |
6.4 |
5.0 |
3.4 |
3.5 |
3.1 |
2.8 |
Decline in price |
3.2 |
4.8 |
1.9 |
1.3 |
1.2 |
0.5 |
1.3 |
0.9 |
1.2 |
Options |
1-Year Ahead (Percentage of Respondents) |
Prices will increase |
91.4 |
87.0 |
93.0 |
93.0 |
94.9 |
96.4 |
94.1 |
96.1 |
95.3 |
Price increase more than current rate |
65.1 |
56.3 |
57.4 |
57.6 |
66.0 |
73.4 |
61.0 |
72.0 |
65.9 |
Price increase similar to current rate |
20.1 |
20.2 |
20.0 |
22.1 |
21.4 |
15.1 |
21.7 |
19.1 |
21.6 |
Price increase less than current rate |
6.2 |
10.5 |
15.6 |
13.3 |
7.6 |
7.9 |
11.4 |
5.0 |
7.9 |
No change in prices |
5.2 |
5.5 |
5.4 |
5.8 |
3.8 |
2.9 |
4.6 |
2.7 |
3.2 |
Decline in price |
3.5 |
7.6 |
1.6 |
1.2 |
1.3 |
0.7 |
1.3 |
1.2 |
1.5 |
6 Cost of Services |
Round No./Survey Period → |
3-Months Ahead (Percentage of Respondents) |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
Options |
Sep-08 |
Dec-08 |
Mar-09 |
Jun-09 |
Sep-09 |
Dec-09 |
Mar-10 |
Jun-10 |
Sep-10 |
Prices will increase |
89.5 |
86.1 |
87.8 |
87.3 |
92.4 |
91.7 |
89.9 |
94.1 |
94.2 |
Price increase more than current rate |
55.0 |
43.9 |
42.2 |
53.1 |
63.7 |
62.7 |
58.6 |
63.2 |
59.2 |
Price increase similar to current rate |
24.2 |
26.9 |
29.2 |
22.2 |
22.9 |
21.2 |
23.9 |
26.2 |
28.6 |
Price increase less than current rate |
10.3 |
15.3 |
16.4 |
12.0 |
5.8 |
7.8 |
7.5 |
4.8 |
6.4 |
No change in prices |
7.6 |
10.3 |
10.4 |
11.3 |
6.3 |
7.0 |
6.7 |
4.8 |
5.2 |
Decline in price |
3.0 |
3.7 |
1.8 |
1.5 |
1.3 |
1.4 |
3.4 |
1.1 |
0.6 |
Options |
1-Year Ahead (Percentage of Respondents) |
Prices will increase |
91.0 |
88.4 |
90.7 |
88.1 |
95.0 |
92.3 |
89.9 |
94.2 |
94.3 |
Price increase more than current rate |
60.2 |
52.1 |
49.2 |
54.4 |
65.6 |
62.9 |
57.2 |
63.2 |
58.0 |
Price increase similar to current rate |
20.7 |
23.5 |
23.9 |
20.2 |
21.5 |
18.5 |
23.0 |
24.9 |
29.5 |
Price increase less than current rate |
10.1 |
12.9 |
17.6 |
13.5 |
7.9 |
10.9 |
9.8 |
6.1 |
6.8 |
No change in prices |
5.8 |
6.7 |
7.3 |
10.3 |
4.1 |
6.0 |
6.9 |
4.6 |
4.9 |
Decline in price |
3.3 |
4.9 |
2.1 |
1.6 |
1.0 |
1.8 |
3.2 |
1.2 |
0.9 |
|