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Date : Dec 06, 2017
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the November 2017 round of the Inflation Expectations Survey of Households (IESH)1. The survey was conducted in 18 cities and the results are based on responses from 5,100 urban households covering various occupational categories (Table 1).

Highlights:

  1. Over 80 per cent of the respondents expected general prices to increase over the next quarter and over half of them also anticipated higher inflation. (Table 2)

  2. There was a marginal increase in inflation expectation for all product groups over both three months ahead and one year ahead horizons, when compared with the last survey round.

  3. Expectations of the one year ahead price levels of various product groups as well as the general price level remained elevated as observed in the previous round of the survey.

  4. The share of respondents with higher inflation expectations exceeded the proportions observed in the surveys conducted during the last one year for all product groups.

  5. Among product groups, expectations on food prices had the highest coherence with general prices movements, for both the one quarter ahead and one year ahead horizons. (Table 3)

  6. Three month ahead and one year ahead median inflation expectations increased by 30 basis points (bps) and 60 bps, respectively, over the previous survey round; compared to the November 2016 round of the survey, however, inflation expectations softened by 70 bps and 150 bps, respectively. (Table 4)

Table 1: Respondents’ Profile (Category): Share in Total Sample - November 2017
Category of Respondents Share in Total (%) Target Share (%)
Financial Sector Employees 9.9 10.0
Other Employees 15.1 15.0
Self-employed 19.8 20.0
Homemakers 29.8 30.0
Retired Persons 9.2 10.0
Daily Workers 10.7 10.0
Others 5.7 5.0

Table 2: Product-wise Expectations of Prices for Three Months ahead and One Year ahead
(Percentage of Respondents)
Round Nov-16 May-17 Jun-17 Sep-17 Nov-17 Nov-16 May-17 Jun-17 Sep-17 Nov-17
Options: General Three Months Ahead One Year Ahead
Prices will increase 76.0 70.2 77.2 81.3 81.4 86.3 80.9 82.4 93.5 92.8
Price increase more than current rate 40.1 35.9 39.9 50.5 53.2 49.8 46.3 44.1 61.2 64.1
Price increase similar to current rate 23.9 25.0 26.6 25.4 23.1 25.1 26.4 28.3 27.3 23.8
Price increase less than current rate 12.0 9.3 10.7 5.4 5.1 11.4 8.2 10.1 5.0 4.8
No change in prices 18.8 25.2 16.8 15.8 16.3 10.0 14.3 11.2 4.1 5.5
Decline in prices 5.2 4.6 6.0 2.9 2.3 3.7 4.8 6.4 2.5 1.8
Options: Food Product Three Months Ahead One Year Ahead
Prices will increase 71.2 73.7 71.6 79.5 80.3 82.0 79.8 75.8 84.8 85.7
Price increase more than current rate 35.2 38.6 39.1 47.5 50.4 43.0 42.1 38.0 51.4 54.0
Price increase similar to current rate 23.2 23.6 21.8 24.8 23.2 26.5 27.2 26.8 27.5 25.2
Price increase less than current rate 12.9 11.5 10.7 7.3 6.7 12.5 10.6 11.0 6.0 6.5
No change in prices 21.2 18.2 14.2 13.3 12.9 13.3 11.9 12.4 9.3 9.0
Decline in prices 7.6 8.1 14.3 7.1 6.8 4.6 8.2 11.8 5.9 5.3
Options: Non-Food Product Three Months Ahead One Year Ahead
Prices will increase 57.9 66.3 72.1 74.7 75.7 70.9 73.9 74.8 81.4 81.4
Price increase more than current rate 28.4 32.4 36.9 43.4 47.1 34.5 37.1 36.3 48.2 51.2
Price increase similar to current rate 19.2 23.4 23.6 24.8 21.9 24.0 25.7 27.3 26.7 23.5
Price increase less than current rate 10.3 10.6 11.6 6.6 6.7 12.3 11.1 11.2 6.5 6.8
No change in prices 36.3 26.9 18.1 19.3 19.5 24.0 19.1 16.3 13.8 14.4
Decline in prices 5.8 6.8 9.8 5.9 4.8 5.2 7.0 9.0 4.8 4.2
Options: Household Durables Three Months Ahead One Year Ahead
Prices will increase 51.5 51.1 65.4 61.5 61.9 67.6 62.1 70.3 70.7 71.0
Price increase more than current rate 24.9 25.1 34.7 37.3 38.6 33.9 31.9 35.7 42.7 44.5
Price increase similar to current rate 16.8 17.1 20.6 19.1 17.4 22.3 21.5 24.3 22.6 20.7
Price increase less than current rate 9.9 8.9 10.1 5.1 5.8 11.4 8.8 10.3 5.4 5.8
No change in prices 36.9 33.6 20.6 25.3 26.8 22.9 24.9 17.5 19.1 20.3
Decline in prices 11.6 15.3 14.0 13.2 11.3 9.4 13.0 12.2 10.2 8.7
Options: Housing Prices Three Months Ahead One Year Ahead
Prices will increase 65.4 57.3 64.3 68.9 70.5 79.6 69.7 73.4 78.9 78.8
Price increase more than current rate 38.4 33.2 37.1 44.9 48.4 49.6 39.7 42.2 53.0 54.5
Price increase similar to current rate 17.9 17.0 18.6 19.2 17.0 20.5 22.7 22.4 20.8 19.4
Price increase less than current rate 9.0 7.1 8.7 4.9 5.0 9.6 7.3 8.8 5.1 4.9
No change in prices 26.4 26.4 22.0 20.0 20.1 13.9 17.4 15.1 12.4 13.6
Decline in prices 8.2 16.2 13.6 11.1 9.5 6.5 12.9 11.5 8.8 7.7
Options: Cost of Services Three Months Ahead One Year Ahead
Prices will increase 61.3 61.3 68.9 68.7 71.1 80.7 75.5 78.6 82.9 83.4
Price increase more than current rate 30.6 29.4 35.1 40.7 44.3 41.5 37.3 38.8 48.6 51.5
Price increase similar to current rate 19.8 21.7 23.7 22.5 20.7 26.9 26.8 27.8 27.9 25.2
Price increase less than current rate 10.8 10.2 10.2 5.5 6.2 12.3 11.4 12.0 6.4 6.7
No change in prices 36.0 33.0 25.3 27.3 25.8 16.7 19.1 15.6 13.5 14.0
Decline in prices 2.8 5.7 5.8 4.0 3.1 2.6 5.5 5.9 3.7 2.6
Note: Constituent items may not add up to totals, due to rounding off.

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)
Round No. Survey period ended Food Non-Food Households durables Housing Cost of services
Three Months Ahead
45B Nov-16 62.1 50.2 43.2 45.7 46.8
47B May-17 59.8 59.7 51.0 52.5 60.3
48 Jun-17 62.0 64.3 57.2 57.6 63.4
49 Sep-17 66.8 65.8 56.8 60.1 64.9
49B Nov-17 66.6 67.4 57.1 60.3 65.7
One Year Ahead
45B Nov-16 65.0 55.0 50.4 53.7 56.9
47B May-17 66.8 64.4 56.4 58.7 67.3
48 Jun-17 68.2 67.7 62.0 63.2 70.0
49 Sep-17 72.7 69.9 60.5 67.4 69.8
49B Nov-17 72.7 70.5 60.9 66.2 71.3

Table 4: Household Inflation Expectations – Current, Three Months and One Year Ahead
Survey Round Survey Period Ended Inflation rate in Per cent
Current Three Months Ahead One Year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
45B Nov-16 8.3 7.3 4.3 9.1 8.2 4.5 10.5 10.1 4.3
47B May-17 7.5 6.3 4.0 8.1 7.3 4.2 9.2 8.5 4.3
48 Jun-17 7.3 6.4 3.8 8.1 7.5 3.9 9.1 8.6 4.1
49 Sep-17 7.6 6.3 3.9 8.2 7.2 4.0 8.7 8.0 4.5
49B Nov-17 7.7 6.3 4.1 8.4 7.5 4.2 8.9 8.6 4.6

Table 5: Factors that Explain the Total Variability
Round No. Survey Period Ended Current Three Months Ahead One Year Ahead
45B Nov-16 City, Category, Age-Group City, Category City, Category
47B May-17 City, Gender, Category City, Category City, Category
48 Jun-17 City, Age-Group, Category City, Age-Group, Category City, Age-Group, Category
49 Sep-17 City, Gender, Category City, Age-Group, Category City, Gender, Category
49B Nov-17 City, Category, Age-Group City, Category City, Category

Table 6 : Various Group-wise Inflation Expectations: November 2017
  Current Three Months Ahead One Year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
Overall 7.7 6.3 4.1 8.4 7.5 4.2 8.9 8.6 4.6
Gender-wise
Male 7.7 6.5 4.1 8.4 7.5 4.2 8.8 8.4 4.7
Female 7.7 6.1 4.0 8.5 7.5 4.1 9.2 8.7 4.6
Category-wise
Financial Sector Employees 7.3 6.3 3.8 7.9 7.2 4.0 8.4 8.3 4.6
Other Employees 7.6 6.0 4.1 8.4 7.4 4.1 8.6 8.1 4.6
Self Employed 7.9 6.7 4.1 8.4 7.6 4.1 9.0 8.8 4.7
Homemakers 7.7 6.1 4.0 8.5 7.4 4.1 9.2 8.8 4.6
Retired Persons 8.4 6.7 4.6 9.1 7.9 4.6 9.4 8.9 5.0
Daily Workers 7.6 6.2 4.0 8.4 7.5 4.1 8.8 8.7 4.7
Other category 7.3 6.4 3.9 8.0 7.3 4.0 8.5 8.3 4.6
Age Group-wise
Up to 25 years 6.9 6.1 3.5 7.7 7.1 3.5 8.4 8.3 4.2
25 to 30 years 7.3 6.0 3.7 8.1 7.2 3.8 8.6 8.1 4.4
30 to 35 years 7.5 6.1 4.0 8.3 7.3 4.2 8.8 8.2 4.5
35 to 40 years 8.0 6.4 4.2 8.6 7.5 4.4 9.0 8.6 4.8
40 to 45 years 7.7 6.1 3.9 8.4 7.6 4.0 9.0 8.9 4.5
45 to 50 years 8.4 7.1 4.4 9.0 8.1 4.5 9.4 9.5 5.1
50 to 55 years 8.3 7.0 4.5 8.8 8.1 4.5 9.0 8.9 4.9
55 to 60 years 8.3 6.8 4.4 9.0 8.1 4.4 9.4 9.0 4.8
60 years and above 8.4 6.8 4.6 9.2 8.0 4.6 9.6 9.3 5.0
City-wise
Ahmedabad 8.8 8.5 3.7 9.3 9.0 3.8 9.7 10.0 3.9
Bengaluru 4.2 4.1 1.5 5.0 4.8 1.9 5.2 5.2 2.5
Bhopal 7.1 5.7 4.0 7.5 6.4 4.7 7.4 6.5 5.0
Bhubaneswar 9.4 10.1 4.2 10.7 10.7 4.4 11.6 12.3 4.7
Chennai 8.3 6.6 4.0 9.6 8.3 3.9 11.1 10.5 4.0
Delhi 7.2 6.0 4.1 7.5 6.4 4.1 7.5 6.5 4.3
Guwahati 13.7 16.1 4.1 12.5 15.4 4.9 13.2 16.1 5.1
Hyderabad 7.0 6.5 2.1 7.7 7.1 2.2 9.0 8.4 2.3
Jaipur 7.4 5.9 3.0 8.1 6.8 3.6 7.8 7.1 4.5
Kolkata 9.8 9.0 4.4 10.5 9.8 4.4 11.2 10.6 4.4
Lucknow 7.3 6.4 3.3 8.1 7.7 3.5 8.9 9.5 4.3
Mumbai 6.9 6.7 3.3 7.9 7.8 3.4 8.3 8.4 4.5
Nagpur 6.5 5.5 3.8 7.4 6.5 3.6 7.1 6.8 4.0
Patna 6.2 5.9 2.3 6.9 6.6 2.3 7.5 7.6 3.0
Thiruvananthapuram 8.9 8.1 4.2 9.9 9.6 4.8 10.2 10.6 5.9
Chandigarh 8.3 6.2 5.1 8.6 7.0 5.3 7.7 6.3 5.9
Ranchi 5.7 5.6 1.9 6.3 6.2 2.0 7.2 7.3 2.7
Raipur 5.0 5.1 1.9 6.6 6.2 2.7 8.1 8.0 3.2

Table 7: Cross-tabulation of Current and Three Months Ahead Inflation Expectations: November 2017
(Number of Respondents)
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 24 3 4 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 34
1-<2 1 26 10 5 0 0 1 0 0 0 0 0 0 0 0 0 0 0 43
2-<3 2 12 132 53 41 15 3 0 0 0 0 0 0 0 0 0 1 0 259
3-<4 5 2 8 169 88 53 15 8 1 1 1 0 0 0 0 0 0 2 353
4-<5 7 0 5 6 199 106 64 16 6 3 6 0 0 0 0 0 1 1 420
5-<6 14 3 6 17 21 530 278 278 70 10 50 0 2 0 0 5 1 1 1286
6-<7 6 2 2 2 3 8 213 148 76 22 9 1 3 0 0 0 0 0 495
7-<8 6 1 0 1 2 5 10 171 129 74 46 2 6 0 0 0 0 0 453
8-<9 3 0 0 0 1 4 8 1 105 74 73 4 9 1 0 0 3 0 286
9-<10 0 0 0 0 0 1 0 4 5 74 41 24 12 2 1 1 2 1 168
10-<11 0 0 0 1 1 7 0 5 5 6 233 22 92 23 5 89 23 0 512
11-<12 0 0 0 0 0 1 0 0 1 0 1 21 9 12 3 4 3 2 57
12-<13 0 0 0 0 0 0 0 0 0 1 4 0 14 6 4 5 3 0 37
13-<14 0 0 0 0 0 0 1 1 1 0 0 0 0 2 2 7 3 1 18
14-<15 0 0 0 0 1 1 0 2 0 0 2 1 2 1 12 4 9 1 36
15-<16 0 0 0 0 0 1 0 2 0 0 3 0 1 0 0 37 39 1 84
>=16 0 0 0 4 1 7 4 2 0 0 12 0 0 0 0 14 503 12 559
Total 68 49 167 258 358 740 598 638 400 265 481 75 150 47 27 166 591 22 5100

Table 8: Cross-tabulation of Current and One Year Ahead Inflation Expectations: November 2017
(Number of Respondents)
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 23 1 5 0 0 2 0 2 0 1 0 0 0 0 0 0 0 0 34
1-<2 6 20 3 8 3 2 0 0 0 0 0 0 0 0 0 0 0 1 43
2-<3 40 4 76 45 47 16 15 6 4 1 3 0 0 0 1 0 1 0 259
3-<4 36 1 2 115 59 66 20 20 13 9 7 0 3 0 0 0 1 1 353
4-<5 31 0 0 1 131 66 76 28 43 15 19 1 6 0 1 1 0 1 420
5-<6 90 1 2 6 9 340 134 218 141 134 146 15 23 1 1 14 8 3 1286
6-<7 31 0 2 0 2 4 129 65 111 45 50 11 23 5 5 10 1 1 495
7-<8 22 0 0 0 1 1 1 113 76 79 74 12 26 5 9 26 4 4 453
8-<9 16 0 1 0 2 2 3 2 71 26 77 26 30 5 9 11 4 1 286
9-<10 6 0 0 1 0 0 0 3 1 52 29 28 20 6 7 9 4 2 168
10-<11 26 0 0 0 0 4 1 6 2 1 169 18 52 19 15 87 108 4 512
11-<12 2 0 0 0 0 1 0 1 0 1 0 14 0 10 2 13 12 1 57
12-<13 2 0 0 0 0 0 0 0 0 0 1 0 11 3 5 8 7 0 37
13-<14 0 0 0 0 0 0 0 0 1 0 1 0 0 5 1 1 8 1 18
14-<15 2 0 0 0 0 1 0 0 0 0 1 1 3 1 8 3 14 2 36
15-<16 3 0 0 0 0 0 0 0 0 0 3 0 1 0 1 30 45 1 84
>=16 35 0 0 1 1 2 0 0 0 0 6 1 0 0 0 16 478 19 559
Total 371 27 91 177 255 507 379 464 463 364 586 127 198 60 65 229 695 42 5100

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.


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