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Date : Oct 04, 2019
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the September 2019 round of the Inflation Expectations Survey of Households (IESH)1. The survey was conducted in 18 major cities and the results are based on responses from 5,810 urban households.

Highlights:

i. After 5 rounds of either declining or remaining stable, three months ahead median inflation expectations of households hardened to 8.0 per cent in the September 2019 round from 7.6 per cent in the July 2019 round of the survey; meanwhile, one year ahead median inflation expectations picked up by 20 basis points to 8.1 per cent (Chart 1a, 1b, Table 2).

ii. More households expect general prices to rise over the three months ahead and a year ahead horizons than in July 2019. (Table 1b).

Chart 1a & 1b

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)
Survey period ended Sep-18 Mar-19 May-19 Jul-19 Sep-19
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 80.4 0.92 74.8 1.02 78.3 1.01 77.9 0.95 79.3 0.94
Price increase more than current rate 49.1 1.15 44.1 1.08 50.0 1.22 49.8 1.15 49.0 1.23
Price increase similar to current rate 27.6 1.00 26.9 0.97 25.6 1.01 24.7 0.98 25.1 1.04
Price increase less than current rate 3.7 0.38 3.8 0.41 2.8 0.32 3.4 0.38 5.2 0.51
No changes in prices 17.4 0.88 21.9 0.98 18.4 0.96 18.5 0.88 18.6 0.92
Decline in prices 2.2 0.31 3.4 0.36 3.3 0.35 3.6 0.39 2.1 0.29
Food Product                    
Prices will increase 79.5 0.89 73.7 0.96 78.5 0.87 80.0 0.87 81.4 0.86
Price increase more than current rate 48.9 1.12 43.6 1.06 48.5 1.13 48.5 1.09 52.9 1.14
Price increase similar to current rate 24.5 0.91 24.1 0.88 24.7 0.94 25.7 1.01 21.4 0.88
Price increase less than current rate 6.1 0.48 6.0 0.49 5.4 0.46 5.8 0.47 7.1 0.59
No changes in prices 15.5 0.82 17.5 0.84 15.0 0.77 13.8 0.75 13.2 0.78
Decline in prices 4.9 0.40 8.8 0.56 6.5 0.47 6.2 0.52 5.4 0.45
Non- Food Product                    
Prices will increase 78.9 0.87 71.3 0.94 75.8 0.91 73.8 0.97 74.7 0.95
Price increase more than current rate 47.5 1.11 41.0 1.02 45.2 1.15 43.1 1.14 45.5 1.16
Price increase similar to current rate 25.3 0.91 24.5 0.86 25.3 0.91 25.2 0.93 21.8 0.90
Price increase less than current rate 6.1 0.48 5.7 0.48 5.4 0.44 5.5 0.46 7.3 0.57
No changes in prices 17.1 0.81 21.9 0.87 18.1 0.81 20.4 0.90 20.8 0.88
Decline in prices 4.0 0.38 6.8 0.47 6.0 0.47 5.8 0.48 4.5 0.42
Household Durables                    
Prices will increase 56.6 1.05 59.5 1.05 61.3 1.12 57.9 1.07 56.2 1.07
Price increase more than current rate 32.4 1.05 35.2 0.99 37.0 1.12 33.7 1.05 33.9 1.11
Price increase similar to current rate 19.5 0.80 19.3 0.79 19.9 0.85 19.6 0.81 17.3 0.80
Price increase less than current rate 4.7 0.41 5.0 0.41 4.3 0.41 4.6 0.41 4.9 0.45
No changes in prices 30.8 0.98 27.7 0.96 27.2 1.01 28.2 0.96 28.5 0.96
Decline in prices 12.5 0.66 12.8 0.62 11.5 0.64 13.9 0.67 15.4 0.73
Cost of Housing                    
Prices will increase 67.1 0.92 68.1 0.98 70.9 1.06 68.6 1.01 68.1 1.10
Price increase more than current rate 45.2 1.02 44.2 0.97 46.9 1.13 45.2 1.04 45.2 1.23
Price increase similar to current rate 17.9 0.78 19.5 0.76 19.8 0.83 19.4 0.82 17.9 0.81
Price increase less than current rate 4.0 0.40 4.4 0.41 4.2 0.39 4.0 0.38 5.0 0.44
No changes in prices 24.1 0.87 22.4 0.88 21.7 0.96 22.8 0.90 23.1 0.98
Decline in prices 8.8 0.59 9.5 0.60 7.3 0.52 8.6 0.58 8.7 0.59
Cost of Services                    
Prices will increase 67.7 1.04 66.4 1.02 68.6 1.03 66.1 1.03 63.5 1.04
Price increase more than current rate 41.8 1.15 39.2 1.00 42.6 1.14 39.8 1.07 40.2 1.15
Price increase similar to current rate 21.0 0.89 21.9 0.84 21.7 0.89 21.6 0.83 18.1 0.76
Price increase less than current rate 5.0 0.43 5.3 0.45 4.3 0.41 4.7 0.42 5.3 0.45
No changes in prices 29.6 1.01 28.9 0.99 27.7 0.99 28.7 0.94 31.6 1.00
Decline in prices 2.7 0.33 4.7 0.42 3.8 0.37 5.3 0.46 4.8 0.42
Note: 1. The table provides estimates and standard errors for qualitative responses from the September 2018 round onwards.
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)
Survey period ended Sep-18 Mar-19 May-19 Jul-19 Sep-19
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 88.3 0.77 84.4 0.90 86.3 0.77 83.8 0.87 87.0 0.78
Price increase more than current rate 59.7 1.15 54.6 1.08 58.5 1.19 56.8 1.15 57.3 1.29
Price increase similar to current rate 25.3 0.97 26.6 0.93 24.9 1.03 24.1 1.01 25.1 1.07
Price increase less than current rate 3.3 0.35 3.2 0.38 3.0 0.32 2.9 0.35 4.6 0.47
No changes in prices 9.1 0.69 12.6 0.83 10.2 0.70 12.6 0.78 10.6 0.73
Decline in prices 2.6 0.32 3.0 0.33 3.5 0.37 3.6 0.40 2.4 0.31
Food Product                    
Prices will increase 84.8 0.78 80.1 0.87 83.1 0.76 81.9 0.80 83.0 0.86
Price increase more than current rate 52.5 1.16 47.2 1.06 50.4 1.19 49.3 1.16 52.2 1.23
Price increase similar to current rate 27.0 0.96 28.0 0.88 27.6 0.97 27.7 0.98 25.4 0.96
Price increase less than current rate 5.3 0.45 5.0 0.44 5.1 0.43 4.8 0.42 5.4 0.53
No changes in prices 9.7 0.64 14.0 0.76 11.4 0.64 12.0 0.67 11.9 0.76
Decline in prices 5.5 0.45 5.9 0.45 5.5 0.43 6.1 0.49 5.2 0.43
Non- Food Product                    
Prices will increase 82.3 0.79 78.2 0.89 81.3 0.81 78.1 0.89 78.6 0.94
Price increase more than current rate 51.0 1.18 45.7 1.05 49.7 1.18 46.1 1.11 48.1 1.25
Price increase similar to current rate 26.1 0.91 27.5 0.89 26.8 0.99 27.1 0.97 24.4 0.98
Price increase less than current rate 5.2 0.44 5.0 0.41 4.9 0.44 4.9 0.44 6.1 0.52
No changes in prices 13.1 0.70 16.9 0.80 13.7 0.72 16.6 0.80 16.6 0.85
Decline in prices 4.6 0.40 5.0 0.41 5.0 0.43 5.3 0.47 4.8 0.43
Household Durables                    
Prices will increase 67.5 0.97 68.3 0.99 68.8 1.04 66.2 1.01 64.1 1.04
Price increase more than current rate 40.7 1.10 41.3 1.02 42.9 1.14 39.8 1.08 39.0 1.17
Price increase similar to current rate 22.0 0.83 22.6 0.81 21.9 0.88 22.0 0.91 19.4 0.82
Price increase less than current rate 4.8 0.42 4.4 0.41 4.0 0.40 4.3 0.39 5.6 0.49
No changes in prices 22.6 0.84 21.9 0.89 21.5 0.91 23.0 0.89 24.2 0.90
Decline in prices 10.0 0.58 9.8 0.57 9.7 0.59 10.9 0.61 11.8 0.64
Cost of Housing                    
Prices will increase 77.9 0.89 77.6 0.86 79.8 0.84 76.9 0.89 77.3 0.89
Price increase more than current rate 52.9 1.08 51.0 1.01 54.3 1.05 52.1 1.00 51.8 1.15
Price increase similar to current rate 21.0 0.87 22.9 0.77 21.9 0.84 21.5 0.83 20.6 0.85
Price increase less than current rate 4.0 0.38 3.8 0.36 3.6 0.37 3.4 0.34 4.8 0.45
No changes in prices 15.1 0.74 15.2 0.75 14.3 0.77 15.3 0.75 15.5 0.73
Decline in prices 7.0 0.52 7.2 0.53 5.9 0.45 7.8 0.55 7.2 0.53
Cost of Services                    
Prices will increase 82.0 0.81 78.8 0.87 80.9 0.83 77.1 0.93 79.0 0.93
Price increase more than current rate 49.7 1.18 47.5 1.02 50.3 1.12 47.2 1.12 50.0 1.23
Price increase similar to current rate 27.3 0.96 26.4 0.87 25.3 0.94 25.2 0.95 22.7 0.93
Price increase less than current rate 5.0 0.44 4.8 0.42 5.3 0.49 4.6 0.43 6.3 0.51
No changes in prices 15.6 0.76 17.4 0.81 15.5 0.77 17.8 0.82 17.2 0.85
Decline in prices 2.4 0.29 3.9 0.37 3.6 0.36 5.2 0.47 3.8 0.38
Note: 1. The table provides estimates and standard errors for qualitative responses from the September 2018 round onwards.
2. Constituent items may not add up to the corresponding total, due to rounding off.

Table 2: Inflation Expectations of Various Groups: September 2019
  Current Perception Three Months ahead Expectation One Year ahead Expectation
Mean Median Mean Median Mean Median
Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Overall 8.2 0.12 7.1 0.18 8.9 0.12 8.0 0.15 8.6 0.13 8.1 0.19
Gender-wise                        
Male 8.4 0.14 7.2 0.23 9.0 0.14 8.1 0.20 8.5 0.17 8.1 0.23
Female 8.0 0.15 6.7 0.25 8.8 0.15 7.8 0.19 8.7 0.18 8.2 0.24
Category-wise                        
Financial Sector Employees 8.0 0.60 6.6 0.76 8.3 0.57 6.8 0.78 7.6 0.59 6.2 0.72
Other Employees 7.9 0.19 6.9 0.28 8.6 0.19 7.7 0.23 8.3 0.21 7.9 0.25
Self Employed 8.5 0.20 7.6 0.31 9.1 0.21 8.2 0.24 8.5 0.25 8.1 0.31
Homemaker 8.0 0.17 6.6 0.26 8.7 0.16 7.8 0.19 8.7 0.20 8.2 0.25
Retired Persons 9.2 0.31 9.1 0.72 9.8 0.34 9.8 0.62 9.0 0.40 9.1 0.87
Daily Workers 8.1 0.27 7.0 0.55 8.8 0.28 8.2 0.42 8.6 0.32 8.3 0.50
Other category 8.1 0.26 7.0 0.33 8.7 0.26 7.8 0.30 8.7 0.29 8.3 0.38
Age Group-wise                        
Up to 25 years 7.8 0.19 6.5 0.25 8.4 0.20 7.5 0.23 8.4 0.24 7.9 0.24
25 to 30 years 7.8 0.20 6.9 0.33 8.7 0.21 7.9 0.25 8.6 0.24 8.5 0.27
30 to 35 years 8.0 0.20 6.8 0.28 8.7 0.21 7.7 0.23 8.8 0.24 8.1 0.32
35 to 40 years 8.4 0.21 7.1 0.35 8.9 0.21 7.8 0.28 8.6 0.25 8.0 0.35
40 to 45 years 8.2 0.21 6.7 0.32 8.9 0.22 7.7 0.32 8.5 0.26 8.1 0.36
45 to 50 years 8.3 0.24 7.6 0.33 8.9 0.24 8.3 0.33 8.6 0.29 8.3 0.45
50 to 55 years 8.5 0.28 7.8 0.43 9.0 0.29 8.1 0.36 8.6 0.34 8.1 0.49
55 to 60 years 8.8 0.31 7.7 0.47 9.6 0.30 8.9 0.44 8.7 0.36 8.4 0.44
60 years and above 8.8 0.28 7.9 0.57 9.3 0.30 8.5 0.49 8.7 0.33 8.3 0.49
City-wise                        
Ahmedabad 9.5 0.42 8.8 0.95 10.5 0.48 10.0 0.84 9.9 0.51 9.8 0.80
Bengaluru 7.0 0.34 5.8 0.14 8.0 0.32 7.1 0.31 8.1 0.34 7.6 0.33
Bhopal 8.1 0.63 6.7 0.98 9.3 0.64 8.6 1.12 8.8 0.51 8.8 0.96
Bhubaneswar 6.3 0.47 5.5 0.20 7.1 0.64 6.3 0.68 7.4 0.82 6.9 0.78
Chennai 11.8 0.45 11.6 1.07 12.7 0.44 14.4 1.09 12.8 0.49 15.8 0.62
Delhi 7.4 0.29 6.1 0.30 7.7 0.28 6.6 0.33 7.5 0.32 6.6 0.38
Guwahati 5.8 1.05 5.2 0.98 5.9 1.14 5.3 1.06 5.6 1.33 4.9 1.20
Hyderabad 9.2 0.76 8.6 1.52 9.9 0.73 9.6 1.26 9.9 0.73 9.8 1.24
Jaipur 7.1 0.27 6.7 0.47 7.9 0.32 7.5 0.40 7.8 0.66 7.8 0.63
Kolkata 9.2 0.24 8.7 0.47 9.9 0.25 9.4 0.34 9.9 0.26 9.7 0.36
Lucknow 9.0 0.73 8.6 1.42 9.6 0.71 9.2 1.09 9.8 0.74 9.8 1.10
Mumbai 7.6 0.24 6.8 0.35 8.1 0.24 7.5 0.27 6.7 0.37 6.8 0.62
Nagpur 8.7 0.62 7.8 0.81 9.7 0.65 9.1 0.80 9.1 0.60 9.4 0.83
Patna 6.5 0.28 6.0 0.19 6.8 0.29 6.2 0.25 6.7 0.37 6.3 0.35
Thiruvananthapuram 6.1 0.47 5.3 0.29 7.2 0.47 6.1 0.54 8.6 0.56 7.9 0.63
Chandigarh 8.2 0.50 8.2 0.72 8.0 0.43 7.6 0.38 8.2 0.61 8.3 0.45
Ranchi 6.2 0.38 5.6 0.19 7.5 0.48 7.0 0.39 7.9 0.77 7.7 0.70
Raipur 8.1 0.54 7.1 1.12 8.4 0.73 7.3 1.16 8.4 0.91 8.8 1.88
Note: The table provides estimates and standard errors for quantitative responses for the September 2019 round.

Table 3: Household Inflation Expectations – Current Perception, Three Months and One Year Ahead Expectations
  Current Perception Three Months ahead Expectation One Year ahead Expectation
Mean Median Mean Median Mean Median
Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Sep-18 9.2 0.12 8.4 0.19 9.9 0.12 9.4 0.27 9.6 0.14 9.8 0.23
Mar-19 8.0 0.09 6.9 0.14 8.7 0.10 7.8 0.12 8.3 0.12 8.1 0.17
May-19 7.8 0.10 6.6 0.15 8.6 0.10 7.6 0.12 8.4 0.12 8.1 0.16
Jul-19 7.9 0.10 6.6 0.15 8.6 0.10 7.6 0.12 8.3 0.13 7.9 0.18
Sep-19 8.2 0.12 7.1 0.18 8.9 0.12 8.0 0.15 8.6 0.13 8.1 0.19
Note: The table provides estimates and standard errors for quantitative responses.

Table 4: 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-18 64.4 65.3 52.8 58.6 64.3
Mar-19 62.6 62.3 54.9 58.8 63.4
May-19 66.4 65.4 56.8 62.0 66.2
Jul-19 66.1 65.5 55.3 60.8 65.0
Sep-19 62.7 62.1 50.2 56.8 61.2
One Year Ahead
Sep-18 72.2 71.5 60.0 66.5 71.4
Mar-19 70.2 68.8 61.8 66.0 69.9
May-19 71.6 71.3 62.7 70.7 72.5
Jul-19 72.3 71.2 61.5 70.0 72.4
Sep-19 70.7 67.5 56.8 65.5 70.0
Note: Figures are based on sample observations

Table 5(a): Cross-tabulation of Number of Respondents by Current Inflation Perception and Three Months Ahead Inflation Expectations: September 2019
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 5 2 0 1 2 0 0 0 0 0 0 0 0 0 0 0 0 34
1-<2 5 64 49 6 1 1 0 0 0 0 0 0 0 0 0 0 1 0 127
2-<3 3 11 150 75 38 17 0 2 1 0 0 0 0 0 0 0 0 0 297
3-<4 0 3 13 159 71 64 16 3 1 1 2 0 0 1 0 0 1 0 335
4-<5 3 1 12 11 217 91 45 13 4 2 3 1 1 0 0 0 1 1 406
5-<6 2 3 15 30 34 622 205 204 78 13 54 2 3 2 0 3 0 0 1270
6-<7 0 2 2 0 7 6 227 83 62 15 11 0 4 0 0 0 0 2 421
7-<8 0 1 1 3 4 5 12 194 108 46 39 1 2 0 2 2 0 1 421
8-<9 0 2 0 1 3 5 3 3 167 71 75 6 8 1 1 4 0 0 350
9-<10 0 0 0 0 0 4 0 4 7 114 46 20 12 3 3 4 1 1 219
10-<11 0 0 4 2 5 22 5 13 5 7 374 62 114 38 10 131 42 2 836
11-<12 0 0 0 0 0 0 0 1 1 1 1 27 23 18 4 8 4 0 88
12-<13 0 0 0 0 1 0 0 0 0 0 2 0 34 12 16 17 10 0 92
13-<14 0 0 1 0 0 0 0 0 0 0 0 1 0 8 10 6 6 0 32
14-<15 0 0 0 0 0 0 0 0 0 0 4 1 0 0 15 10 11 0 41
15-<16 0 0 0 0 0 1 1 1 2 1 3 0 2 1 0 88 88 4 192
>=16 0 0 0 2 2 5 0 2 0 2 23 0 1 0 1 10 589 12 649
Total 37 92 249 289 384 845 514 523 436 273 637 121 204 84 62 283 754 23 5810
Note: Figures are based on sample observations

Table 5(b): Cross-tabulation of Number of Respondents by Current Inflation Perception and One Year Ahead Inflation Expectations: September 2019
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 17 6 2 3 0 4 0 0 1 0 1 0 0 0 0 0 0 0 34
1-<2 24 27 24 33 12 5 1 0 0 0 0 1 0 0 0 0 0 0 127
2-<3 59 3 78 48 53 36 8 4 4 1 2 0 1 0 0 0 0 0 297
3-<4 41 1 5 84 61 79 31 9 10 2 6 1 0 2 0 1 2 0 335
4-<5 59 1 7 7 129 81 56 27 19 8 8 0 0 0 1 0 2 1 406
5-<6 183 2 7 7 16 376 147 209 109 38 128 2 11 5 3 14 11 2 1270
6-<7 68 0 2 1 1 3 140 57 72 23 28 6 14 1 0 1 2 2 421
7-<8 56 0 2 2 0 7 7 114 77 54 73 4 11 3 3 6 2 0 421
8-<9 41 2 0 0 2 4 4 2 97 43 92 9 27 4 7 10 6 0 350
9-<10 23 0 0 1 1 0 1 6 3 78 39 19 24 6 4 7 7 0 219
10-<11 75 0 1 0 0 10 4 9 6 2 251 31 98 32 18 181 116 2 836
11-<12 2 0 0 0 0 1 0 0 0 0 0 21 14 19 4 15 11 1 88
12-<13 7 0 0 0 0 1 0 0 0 0 1 1 20 8 11 13 30 0 92
13-<14 1 0 0 1 0 0 0 0 0 0 1 0 0 3 6 9 11 0 32
14-<15 3 0 0 0 0 1 0 0 0 0 0 1 0 1 9 10 16 0 41
15-<16 20 0 0 0 0 2 0 1 2 0 3 0 2 0 1 57 101 3 192
>=16 61 0 0 0 1 3 0 0 0 0 15 0 2 1 3 6 542 15 649
Total 740 42 128 187 276 613 399 438 400 249 648 96 224 85 70 330 859 26 5810
Note: Figures are based on sample observations

1 The survey is conducted at bi-monthly intervals by the Reserve Bank of India. It provides directional information on near-term inflationary pressures as expected by the respondents and may reflect their own consumption patterns. Hence, they should be treated as households’ sentiments on inflation.


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