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Date : Feb 07, 2018
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the December 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 5,321 urban households covering various occupational categories (Table 1).

Highlights:

  1. The proportion of respondents expecting prices to increase in the next three months at more than the current rate declined in the December 2017 round across all product groups. (Table 2)

  2. Expectations of the rate of price rise over the next one year period also moderated in a broad-based manner as compared with the preceding (November 2017) round of the survey.

  3. Households’ responses on general price movements were closely associated with those on food and non-food prices, as well as the cost of services. (Table 3)

  4. Three months ahead median inflation expectations remained unchanged while for one year ahead, they declined by 10 basis points (bps) from the last survey round.

  5. From a year ago, i.e. vis-à-vis the December 2016 round of the survey, both three months ahead and one year ahead inflation expectations rose by 20 bps. (Table 4)

Table 1: Respondents’ Profile (Category): Share in Total Sample - December 2017
Category of Respondents Share in Total (%) Target Share (%)
Financial Sector Employees 9.9 10.0
Other Employees 15.2 15.0
Self-employed 19.7 20.0
Homemakers 30.3 30.0
Retired Persons 9.5 10.0
Daily Workers 9.5 10.0
Others 5.8 5.0

Table 2: Product-wise Expectations of Prices for Three Months ahead and One Year ahead
(Percentage of Respondents)
Round Dec-16 Jun-17 Sep-17 Nov-17 Dec-17 Dec-16 Jun-17 Sep-17 Nov-17 Dec-17
Options: General Three Months Ahead One Year Ahead
Prices will increase 59.9 77.2 81.3 81.4 80.6 68.1 82.4 93.5 92.8 92.7
Price increase more than current rate 28.9 39.9 50.5 53.2 49.8 35.2 44.1 61.2 64.1 63.0
Price increase similar to current rate 23.0 26.6 25.4 23.1 24.6 24.9 28.3 27.3 23.8 23.9
Price increase less than current rate 8.0 10.7 5.4 5.1 6.2 8.0 10.1 5.0 4.8 5.8
No change in prices 26.9 16.8 15.8 16.3 17.4 19.8 11.2 4.1 5.5 5.3
Decline in prices 13.3 6.0 2.9 2.3 2.0 12.2 6.4 2.5 1.8 2.0
Options: Food Product Three Months Ahead One Year Ahead
Prices will increase 61.2 71.6 79.5 80.3 78.1 66.4 75.8 84.8 85.7 85.0
Price increase more than current rate 30.3 39.1 47.5 50.4 45.8 32.2 38.0 51.4 54 52.1
Price increase similar to current rate 19.6 21.8 24.8 23.2 23.4 24.1 26.8 27.5 25.2 24.9
Price increase less than current rate 11.3 10.7 7.3 6.7 8.9 10.1 11.0 6.0 6.5 8.1
No change in prices 17.1 14.2 13.3 12.9 15.5 16.6 12.4 9.3 9.0 10.4
Decline in prices 21.7 14.3 7.1 6.8 6.4 17.1 11.8 5.9 5.3 4.6
Options: Non-Food Product Three Months Ahead One Year Ahead
Prices will increase 57.8 72.1 74.7 75.7 73.3 62.2 74.8 81.4 81.4 80.5
Price increase more than current rate 27.4 36.9 43.4 47.1 41.2 29.2 36.3 48.2 51.2 48.8
Price increase similar to current rate 20.6 23.6 24.8 21.9 23.3 23.3 27.3 26.7 23.5 23.7
Price increase less than current rate 9.7 11.6 6.6 6.7 8.8 9.7 11.2 6.5 6.8 7.9
No change in prices 26.2 18.1 19.3 19.5 21.9 23.5 16.3 13.8 14.4 15.4
Decline in prices 16.0 9.8 5.9 4.8 4.8 14.4 9.0 4.8 4.2 4.2
Options: Household Durables Three Months Ahead One Year Ahead
Prices will increase 44.6 65.4 61.5 61.9 60.0 52.7 70.3 70.7 71 68.8
Price increase more than current rate 20.9 34.7 37.3 38.6 35.0 24.8 35.7 42.7 44.5 42.3
Price increase similar to current rate 16.4 20.6 19.1 17.4 18.6 18.9 24.3 22.6 20.7 19.8
Price increase less than current rate 7.3 10.1 5.1 5.8 6.4 9.0 10.3 5.4 5.8 6.7
No change in prices 32.5 20.6 25.3 26.8 28.8 27.0 17.5 19.1 20.3 21.7
Decline in prices 22.9 14.0 13.2 11.3 11.3 20.3 12.2 10.2 8.7 9.5
Options: Housing Prices Three Months Ahead One Year Ahead
Prices will increase 44.6 64.3 68.9 70.5 69.5 54.0 73.4 78.9 78.8 78.4
Price increase more than current rate 24.8 37.1 44.9 48.4 45.9 29.6 42.2 53.0 54.5 53.3
Price increase similar to current rate 13.1 18.6 19.2 17 18.0 16.7 22.4 20.8 19.4 19.2
Price increase less than current rate 6.6 8.7 4.9 5.0 5.6 7.7 8.8 5.1 4.9 5.9
No change in prices 21.5 22.0 20.0 20.1 21.0 18.0 15.1 12.4 13.6 14.0
Decline in prices 33.9 13.6 11.1 9.5 9.5 28.0 11.5 8.8 7.7 7.7
Options: Cost of Services Three Months Ahead One Year Ahead
Prices will increase 57.6 68.9 68.7 71.1 71.5 66.8 78.6 82.9 83.4 82.8
Price increase more than current rate 27.1 35.1 40.7 44.3 41.4 32.6 38.8 48.6 51.5 50.5
Price increase similar to current rate 21.0 23.7 22.5 20.7 23.2 23.7 27.8 27.9 25.2 24.3
Price increase less than current rate 9.5 10.2 5.5 6.2 6.8 10.5 12.0 6.4 6.7 8.0
No change in prices 29.8 25.3 27.3 25.8 25.6 22.3 15.6 13.5 14 14.2
Decline in prices 12.6 5.8 4.0 3.1 3.0 10.9 5.9 3.7 2.6 3.0
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
46 Dec-16 55.4 55.8 48.5 47.0 57.7
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
50 Dec-17 64.9 64.1 55.5 58.4 63.8
One Year Ahead
46 Dec-16 62.2 59.7 52.8 51.7 62.3
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
50 Dec-17 70.1 69.0 58.8 65.1 70.5

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.
46 Dec-16 7.4 6.5 3.9 7.9 7.3 4.1 8.7 8.3 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
50 Dec-17 7.9 6.7 4.2 8.4 7.5 4.3 8.9 8.5 4.8

Table 5: Factors that Explain the Total Variability
Round No. Survey Period Ended Current Three Months Ahead One Year Ahead
46 Dec-16 City, Gender, Age-Group City, Category, Age-Group 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
50 Dec-17 City, Category, Age-Group, Gender City, Category, Age-Group City, Category

 
Table 6 : Various Group-wise Inflation Expectations: December 2017
  Current Three Months Ahead One Year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
Overall 7.9 6.7 4.2 8.4 7.5 4.3 8.9 8.5 4.8
Gender-wise
Male 8.0 6.9 4.3 8.4 7.4 4.4 8.8 8.3 4.8
Female 7.7 6.6 4.1 8.4 7.5 4.2 9.1 8.7 4.7
Category-wise
Financial Sector Employees 7.4 6.6 3.7 7.8 7.3 4.0 8.4 8.0 4.4
Other Employees 7.9 6.6 4.4 8.3 7.4 4.5 8.7 8.3 4.9
Self Employed 7.9 6.9 4.2 8.3 7.4 4.3 8.6 8.3 4.9
Homemakers 7.9 6.8 4.2 8.5 7.6 4.2 9.3 8.9 4.7
Retired Persons 8.2 6.7 4.6 8.5 7.3 4.7 8.9 8.1 5.1
Daily Workers 8.3 7.0 4.3 8.8 7.9 4.3 9.6 9.4 4.9
Other category 7.5 6.5 3.8 8.0 7.3 3.9 8.5 8.1 4.3
Age Group-wise
Up to 25 years 7.1 6.3 3.7 7.7 7.1 3.8 8.4 8.0 4.1
25 to 30 years 7.7 6.7 4.0 8.2 7.4 4.2 8.7 8.1 4.5
30 to 35 years 7.8 6.7 4.0 8.3 7.4 4.1 9.0 8.6 4.7
35 to 40 years 7.9 6.3 4.3 8.5 7.4 4.3 9.0 8.4 4.9
40 to 45 years 8.1 7.3 4.1 8.8 8.0 4.3 9.3 9.3 4.9
45 to 50 years 8.2 7.3 4.4 8.5 7.5 4.6 9.0 9.1 5.1
50 to 55 years 8.2 7.4 4.4 8.7 7.8 4.6 9.3 9.1 5.1
55 to 60 years 8.7 7.5 4.8 8.8 7.9 4.8 9.2 8.8 5.3
60 years and above 8.6 7.2 4.7 8.8 7.7 4.7 9.2 8.6 5.2
City-wise
Ahmedabad 10.4 10.1 4.1 11.0 10.4 4.1 11.6 10.8 4.2
Bengaluru 3.1 3.0 1.0 3.9 3.8 1.3 4.5 4.5 1.5
Bhopal 8.1 6.9 4.2 8.0 7.4 4.8 8.1 7.8 4.9
Bhubaneswar 7.5 6.3 3.1 9.4 8.6 3.4 11.5 10.9 3.5
Chennai 10.1 10.3 4.2 11.2 10.9 4.5 12.4 15.0 4.6
Delhi 7.7 6.3 4.1 7.7 6.6 4.2 7.6 6.6 4.5
Guwahati 12.1 14.1 5.0 8.1 7.1 5.7 8.8 8.1 6.0
Hyderabad 9.1 7.8 3.9 9.8 8.5 3.9 10.7 9.7 3.7
Jaipur 8.0 7.4 3.2 8.1 7.6 3.4 8.7 8.4 4.1
Kolkata 10.3 10.2 4.8 11.1 10.6 4.6 11.8 11.3 4.5
Lucknow 6.7 6.2 2.7 7.1 6.8 2.8 6.9 7.2 3.7
Mumbai 8.1 7.6 3.1 8.6 8.3 3.3 8.8 9.0 4.1
Nagpur 6.7 5.9 3.6 7.6 7.2 3.8 8.0 8.0 4.0
Patna 6.0 5.7 2.3 6.3 5.9 2.5 6.9 6.3 3.2
Thiruvananthapuram 7.8 6.7 4.0 8.7 7.9 4.2 8.8 9.1 5.4
Chandigarh 5.4 4.7 3.4 6.6 5.9 3.5 7.9 7.6 4.0
Ranchi 5.9 5.3 2.5 6.6 6.3 3.0 6.5 6.3 3.7
Raipur 5.5 5.2 3.0 6.1 5.5 3.3 6.6 6.3 4.6

Table 7: Cross-tabulation of Current and Three Months Ahead Inflation Expectations: December 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 28 7 4 1 2 2 1 1 0 0 0 0 1 0 0 0 0 0 47
1-<2 7 31 27 7 1 0 0 0 0 0 1 0 0 0 0 0 0 0 74
2-<3 3 16 113 93 36 17 3 1 0 0 1 0 0 0 0 0 0 0 283
3-<4 6 2 20 179 121 56 12 3 0 0 1 0 0 0 0 0 0 1 401
4-<5 7 1 11 8 250 122 61 15 5 1 2 0 0 0 0 1 0 0 484
5-<6 13 3 7 18 21 465 188 185 69 10 45 2 3 0 0 8 0 1 1038
6-<7 0 2 0 4 0 14 222 128 58 12 9 0 1 0 0 0 0 2 452
7-<8 6 1 4 4 1 7 6 231 118 45 36 2 4 1 0 0 0 0 466
8-<9 6 1 3 0 0 5 4 3 139 88 59 8 16 2 0 0 3 1 338
9-<10 2 0 1 1 1 1 0 2 5 82 55 24 18 2 3 2 0 0 199
10-<11 9 1 2 7 0 26 2 7 17 5 270 57 98 35 9 102 21 4 672
11-<12 2 2 2 0 0 0 0 1 0 1 0 20 10 4 1 3 2 3 51
12-<13 1 0 0 0 1 0 0 0 1 1 2 1 20 9 6 4 3 0 49
13-<14 1 0 0 0 0 0 0 0 1 0 0 1 1 6 0 3 5 0 18
14-<15 0 1 0 2 0 0 0 0 0 0 0 0 1 0 8 3 8 1 24
15-<16 4 0 0 0 0 2 3 0 0 0 5 0 1 1 3 66 58 5 148
>=16 11 1 2 2 3 14 3 1 0 1 18 3 3 1 0 11 489 14 577
Total 106 69 196 326 437 731 505 578 413 246 504 118 177 61 30 203 589 32 5321

Table 8: Cross-tabulation of Current and One Year Ahead Inflation Expectations: December 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 24 4 6 1 3 3 1 2 0 0 2 0 0 0 0 0 1 0 47
1-<2 15 12 20 17 5 4 0 1 0 0 0 0 0 0 0 0 0 0 74
2-<3 31 2 55 56 73 29 14 10 7 0 4 0 0 0 1 0 0 1 283
3-<4 24 3 7 94 83 105 35 18 13 6 8 2 1 0 0 0 0 2 401
4-<5 40 2 4 3 164 71 99 37 30 16 9 2 3 1 0 1 1 1 484
5-<6 84 0 6 8 5 286 95 171 101 69 130 10 15 4 3 30 17 4 1038
6-<7 38 0 2 0 1 7 122 68 104 43 46 1 8 4 0 4 0 4 452
7-<8 37 0 0 1 2 1 8 133 67 85 68 17 21 3 6 12 4 1 466
8-<9 16 0 0 0 0 2 4 2 93 37 101 20 35 9 5 7 6 1 338
9-<10 18 0 0 0 0 2 0 1 2 53 24 37 23 10 11 13 3 2 199
10-<11 35 0 4 0 0 17 0 6 9 7 203 27 71 15 25 109 138 6 672
11-<12 4 1 2 0 0 2 0 1 0 0 2 15 2 3 2 9 5 3 51
12-<13 1 0 1 0 0 0 0 0 1 0 0 0 21 2 1 13 9 0 49
13-<14 2 0 0 0 0 1 0 1 0 0 0 0 0 4 2 2 6 0 18
14-<15 1 0 0 1 0 1 0 0 0 0 0 0 1 0 7 2 10 1 24
15-<16 9 0 0 0 0 2 0 0 0 0 3 2 0 2 1 45 79 5 148
>=16 34 0 1 2 3 7 2 1 2 0 11 0 0 0 2 9 486 17 577
Total 413 24 108 183 339 540 380 452 429 316 611 133 201 57 66 256 765 48 5321

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


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