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Date : Feb 07, 2019
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the December 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 5,828 urban households.

Highlights:

i. The proportion of respondents expecting general prices to rise in the next three months and one year ahead horizons fell sharply in relation to the November 2018 round with a similar pattern observed in respect of most of the product groups, and especially for food and non-food products (Table 1a and 1b).

ii. Respondents also moderated their expectations with respect to the rate of future price changes. (Table 1a and 1b).

iii. In quantitative terms, three months ahead and one year ahead median inflation expectations dropped by 80 and 130 basis points (bps), respectively, from their readings in the November 2018 round (Chart 1, Table 2).

iv. The decline in quantitative expectations was observed across various groups of the respondents (Table 2).

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 Dec-17 Jun-18 Sep-18 Nov-18 Dec-18
Options: General Estimate SE Estimate SE Estimate SE
Prices will increase 80.6 83.8 80.4 0.92 77.9 0.91 72.9 1.04
Price increase more than current rate 49.8 50.1 49.1 1.15 47.4 1.12 46.2 1.14
Price increase similar to current rate 24.6 26.4 27.6 1.00 25.6 1.00 23.3 0.96
Price increase less than current rate 6.2 7.3 3.7 0.38 4.9 0.59 3.4 0.39
No change in prices 17.4 14.6 17.4 0.88 19.2 0.87 21.2 0.98
Decline in prices 2.0 1.6 2.2 0.31 2.9 0.33 5.8 0.46
Options: Food Product                
Prices will increase 78.1 81.4 79.5 0.89 77.2 0.89 70.7 0.98
Price increase more than current rate 45.8 47.8 48.9 1.12 46.4 1.03 42.7 1.08
Price increase similar to current rate 23.4 24.8 24.5 0.91 23.6 0.91 22.4 0.87
Price increase less than current rate 8.9 8.7 6.1 0.48 7.3 0.63 5.7 0.48
No change in prices 15.5 13.3 15.5 0.82 16.9 0.81 17.2 0.79
Decline in prices 6.4 5.3 4.9 0.40 5.9 0.46 12.0 0.65
Options: Non-Food Product                
Prices will increase 73.3 78.2 78.9 0.87 75.8 0.90 67.6 1.00
Price increase more than current rate 41.2 44.5 47.5 1.11 45.2 1.07 40.8 1.08
Price increase similar to current rate 23.3 24.4 25.3 0.91 24.1 0.94 21.6 0.89
Price increase less than current rate 8.8 9.3 6.1 0.48 6.5 0.61 5.3 0.47
No change in prices 21.9 17.7 17.1 0.81 18.5 0.79 20.5 0.85
Decline in prices 4.8 4.1 4.0 0.38 5.8 0.48 11.9 0.63
Options: Household Durables                
Prices will increase 60.0 58.7 56.6 1.05 57.9 1.06 56.8 1.08
Price increase more than current rate 35.0 32.6 32.4 1.05 33.8 1.03 34.8 1.08
Price increase similar to current rate 18.6 19.1 19.5 0.80 18.9 0.80 17.9 0.85
Price increase less than current rate 6.4 7.1 4.7 0.41 5.2 0.50 4.1 0.39
No change in prices 28.8 30.9 30.8 0.98 29.7 0.98 24.8 0.91
Decline in prices 11.3 10.4 12.5 0.66 12.4 0.66 18.4 0.77
Options: Housing Prices                
Prices will increase 69.5 71.6 67.1 0.92 68.7 0.96 69.1 1.03
Price increase more than current rate 45.9 45.3 45.2 1.02 44.5 1.05 46.5 1.06
Price increase similar to current rate 18.0 19.9 17.9 0.78 19.0 0.83 18.2 0.79
Price increase less than current rate 5.6 6.4 4.0 0.40 5.2 0.51 4.5 0.41
No change in prices 21.0 20.7 24.1 0.87 23.7 0.88 22.2 0.94
Decline in prices 9.5 7.7 8.8 0.59 7.6 0.54 8.6 0.57
Options: Cost of Services                
Prices will increase 71.5 70.8 67.7 1.04 68.2 0.99 65.7 1.10
Price increase more than current rate 41.4 40.8 41.8 1.15 40.4 1.06 40.2 1.11
Price increase similar to current rate 23.2 22.8 21.0 0.89 22.4 0.86 21.2 0.82
Price increase less than current rate 6.8 7.3 5.0 0.43 5.3 0.48 4.3 0.41
No change in prices 25.6 26.5 29.6 1.01 28.8 0.97 28.2 1.02
Decline in prices 3.0 2.6 2.7 0.33 3.0 0.35 6.1 0.45
1. The table provides estimates and standard errors for qualitative responses for the September, November and December 2018 rounds. 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 Dec-17 Jun-18 Sep-18 Nov-18 Dec-18
Options: General Estimate SE Estimate SE Estimate SE
Prices will increase 92.7 91.6 88.3 0.77 89.7 0.65 83.8 0.82
Price increase more than current rate 63.0 59.8 59.7 1.15 60.0 1.11 57.5 1.15
Price increase similar to current rate 23.9 25.8 25.3 0.97 26.4 0.97 23.3 1.00
Price increase less than current rate 5.8 6.0 3.3 0.35 3.4 0.43 3.0 0.37
No change in prices 5.3 6.5 9.1 0.69 7.6 0.57 11.3 0.73
Decline in prices 2.0 1.9 2.6 0.32 2.7 0.33 4.9 0.43
Options: Food Product                
Prices will increase 85.0 85.1 84.8 0.78 85.4 0.73 80.0 0.82
Price increase more than current rate 52.1 51.4 52.5 1.16 52.3 1.14 50.6 1.08
Price increase similar to current rate 24.9 26.5 27.0 0.96 27.5 0.96 24.7 0.93
Price increase less than current rate 8.1 7.1 5.3 0.45 5.7 0.51 4.7 0.43
No change in prices 10.4 9.7 9.7 0.64 9.4 0.60 12.1 0.68
Decline in prices 4.6 5.3 5.5 0.45 5.2 0.45 7.9 0.52
Options: Non-Food Product                
Prices will increase 80.5 83.3 82.3 0.79 82.4 0.78 76.4 0.92
Price increase more than current rate 48.8 49.1 51.0 1.18 51.6 1.10 47.5 1.09
Price increase similar to current rate 23.7 26.6 26.1 0.91 25.2 0.90 24.2 0.92
Price increase less than current rate 7.9 7.6 5.2 0.44 5.6 0.50 4.7 0.43
No change in prices 15.4 12.7 13.1 0.70 12.7 0.68 15.8 0.78
Decline in prices 4.2 4.0 4.6 0.40 4.9 0.43 7.7 0.54
Options: Household Durables                
Prices will increase 68.8 70.6 67.5 0.97 70.1 0.98 66.9 1.02
Price increase more than current rate 42.3 41.6 40.7 1.10 43.0 1.10 42.0 1.09
Price increase similar to current rate 19.8 21.8 22.0 0.83 22.0 0.88 20.4 0.84
Price increase less than current rate 6.7 7.2 4.8 0.42 5.1 0.47 4.5 0.40
No change in prices 21.7 21.2 22.6 0.84 20.4 0.85 20.1 0.91
Decline in prices 9.5 8.2 10.0 0.58 9.6 0.61 13.0 0.69
Options: Housing Prices                
Prices will increase 78.4 81.0 77.9 0.89 80.6 0.79 79.6 0.85
Price increase more than current rate 53.3 53.0 52.9 1.08 53.8 1.04 55.9 1.00
Price increase similar to current rate 19.2 21.5 21.0 0.87 22.5 0.91 19.8 0.78
Price increase less than current rate 5.9 6.5 4.0 0.38 4.3 0.44 3.9 0.39
No change in prices 14.0 13.3 15.1 0.74 13.3 0.68 13.7 0.74
Decline in prices 7.7 5.7 7.0 0.52 6.1 0.50 6.7 0.50
Options: Cost of Services                
Prices will increase 82.8 84.1 82.0 0.81 83.3 0.75 77.9 0.88
Price increase more than current rate 50.5 49.5 49.7 1.18 52.2 1.11 49.0 1.11
Price increase similar to current rate 24.3 26.6 27.3 0.96 25.7 0.92 24.1 0.90
Price increase less than current rate 8.0 8.0 5.0 0.44 5.4 0.48 4.8 0.44
No change in prices 14.2 13.7 15.6 0.76 13.5 0.68 17.1 0.82
Decline in prices 3.0 2.2 2.4 0.29 3.1 0.34 5.0 0.44
3. The table provides estimates and standard errors for qualitative responses for the September, November and December 2018 rounds. For earlier rounds, the results are based on sample proportions.
4. Constituent items may not add up to the corresponding total, due to rounding off.

Table 2: Inflation Expectations of Various Groups: December 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 8.3 0.11 7.1 0.18 9.1 0.11 8.2 0.15 8.6 0.13 8.5 0.17
Gender-wise                        
Male 8.4 0.14 7.1 0.20 9.1 0.14 8.1 0.21 8.6 0.17 8.2 0.22
Female 8.5 0.14 7.4 0.25 9.3 0.14 8.6 0.19 9.0 0.18 9.2 0.31
Category-wise                        
Financial Sector Employees 8.1 0.54 7.2 0.73 9.0 0.62 8.1 0.79 7.8 0.67 7.6 0.73
Other Employees 8.2 0.19 6.9 0.25 8.9 0.20 7.8 0.24 8.5 0.23 8.1 0.27
Self Employed 8.7 0.21 7.6 0.30 9.2 0.21 8.5 0.31 8.4 0.26 8.3 0.31
Homemaker 8.4 0.16 7.3 0.26 9.2 0.16 8.6 0.21 8.9 0.22 9.1 0.34
Retired Persons 8.9 0.36 7.8 0.43 9.6 0.41 8.9 0.52 9.0 0.43 9.0 0.57
Daily Workers 8.6 0.22 7.2 0.45 9.5 0.23 8.7 0.32 9.1 0.28 9.4 0.50
Other category 8.0 0.22 6.9 0.28 8.7 0.23 7.8 0.26 8.7 0.27 8.3 0.32
Age Group-wise                        
Up to 25 years 7.8 0.19 6.5 0.26 8.5 0.19 7.7 0.22 8.5 0.23 8.3 0.22
25 to 30 years 8.2 0.18 6.9 0.28 9.1 0.19 8.4 0.27 8.8 0.23 8.8 0.34
30 to 35 years 8.4 0.20 7.0 0.29 9.1 0.21 8.0 0.24 8.9 0.25 8.8 0.39
35 to 40 years 8.5 0.21 7.1 0.32 9.3 0.21 8.4 0.32 8.9 0.25 8.7 0.47
40 to 45 years 9.0 0.25 7.8 0.44 9.6 0.26 8.9 0.42 8.8 0.31 8.8 0.45
45 to 50 years 8.6 0.25 7.5 0.41 9.2 0.24 8.7 0.31 8.5 0.30 8.7 0.45
50 to 55 years 9.2 0.31 8.3 0.58 9.9 0.32 9.1 0.54 8.9 0.39 9.2 0.60
55 to 60 years 8.7 0.35 7.1 0.56 9.5 0.37 8.5 0.42 8.7 0.40 8.4 0.65
60 years and above 9.0 0.29 8.0 0.37 9.7 0.28 9.1 0.49 9.0 0.36 9.0 0.56
City-wise                        
Ahmedabad 8.6 0.39 7.9 0.61 9.9 0.35 9.0 0.64 9.2 0.35 8.7 0.38
Bengaluru 6.0 0.31 5.3 0.12 7.6 0.32 7.1 0.48 8.5 0.35 8.4 0.63
Bhopal 7.8 0.66 6.1 0.59 8.0 0.63 6.9 0.85 6.5 0.61 5.5 1.26
Bhubaneswar 6.1 0.50 5.3 0.26 7.0 0.58 6.2 0.59 7.2 1.25 7.1 0.89
Chennai 9.0 0.36 8.7 0.68 10.1 0.39 9.9 0.61 11.4 0.43 11.0 0.70
Delhi 9.2 0.27 8.9 0.64 9.6 0.28 9.4 0.59 8.4 0.34 8.3 0.57
Guwahati 5.8 0.36 5.5 0.22 5.9 0.45 5.7 0.34 4.6 0.55 4.5 1.07
Hyderabad 9.1 0.54 7.2 0.92 9.9 0.53 8.7 1.05 9.8 0.56 9.6 1.16
Jaipur 6.4 0.28 5.9 0.20 6.4 0.28 6.0 0.22 4.2 0.34 3.6 1.68
Kolkata 9.5 0.37 8.4 0.82 10.2 0.38 9.3 0.78 10.4 0.42 10.1 0.52
Lucknow 8.8 0.46 8.4 0.49 9.6 0.46 9.4 0.56 9.7 0.69 10.5 0.47
Mumbai 8.5 0.26 7.6 0.37 9.1 0.26 8.4 0.39 8.0 0.30 8.0 0.42
Nagpur 7.7 0.48 6.3 0.65 8.1 0.50 7.0 0.76 6.6 0.68 6.2 0.90
Patna 7.3 0.38 6.8 0.62 7.7 0.40 7.5 0.50 7.0 0.47 6.8 0.69
Thiruvananthapuram 5.6 0.38 5.0 0.44 6.7 0.45 5.8 0.61 7.5 0.70 6.8 1.17
Chandigarh 8.7 1.02 8.5 1.36 7.8 0.63 7.5 1.12 7.8 0.86 7.7 1.07
Ranchi 10.1 0.63 9.4 0.74 10.7 0.51 10.6 0.49 10.5 0.69 11.6 1.29
Raipur 7.3 0.74 5.8 0.45 7.0 0.90 5.8 0.64 4.7 1.39 2.0 1.73
Note: The table provides estimates and standard errors for quantitative responses for the December 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
Dec-17 64.9 64.1 55.5 58.4 63.8
Jun-18 65.6 64.7 53.8 60.0 63.7
Sep-18 64.4 65.3 52.8 58.6 64.3
Nov-18 65.6 66.8 56.5 61.4 66.2
Dec-18 62.9 64.0 55.3 62.4 64.3
One Year Ahead
Dec-17 70.1 69.0 58.8 65.1 70.5
Jun-18 71.9 71.4 60.9 67.4 71.9
Sep-18 72.2 71.5 60.0 66.5 71.4
Nov-18 73.5 72.3 62.7 67.7 73.2
Dec-18 72.5 71.7 62.5 70.3 72.9
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: December 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 33 0 2 1 1 3 0 0 0 0 1 0 0 0 0 0 1 0 42
1-<2 5 35 16 5 1 0 0 0 0 0 1 0 0 0 0 0 0 0 63
2-<3 4 14 105 50 26 15 1 1 1 0 1 0 0 0 0 1 0 0 219
3-<4 1 5 18 166 82 78 12 5 3 0 3 0 1 0 0 0 0 0 374
4-<5 2 0 9 26 212 86 77 25 13 1 5 0 1 0 0 0 0 0 457
5-<6 2 1 10 44 46 587 177 208 114 20 114 1 1 1 0 7 2 4 1339
6-<7 0 0 1 3 11 19 201 114 63 9 16 1 2 1 0 0 1 0 442
7-<8 0 0 1 4 3 18 15 180 83 55 33 6 4 2 1 1 0 0 406
8-<9 0 0 1 3 3 4 7 6 153 58 90 5 11 1 0 1 2 0 345
9-<10 0 0 1 0 0 3 1 1 4 80 39 15 11 1 1 3 2 0 162
10-<11 2 0 0 0 1 24 4 8 23 11 407 46 151 27 9 124 36 4 877
11-<12 0 1 0 0 0 1 1 1 2 0 3 32 14 12 4 6 3 0 80
12-<13 0 0 0 0 0 0 1 1 2 1 7 2 37 12 7 16 6 0 92
13-<14 0 0 0 0 0 0 0 0 0 0 1 1 0 7 7 9 7 0 32
14-<15 0 0 0 0 0 2 0 0 0 0 0 0 1 0 9 5 16 0 33
15-<16 1 0 0 0 0 0 1 2 2 0 13 0 3 1 0 69 70 2 164
>=16 1 1 0 0 1 5 0 0 1 0 23 1 1 0 1 21 639 6 701
Total 51 57 164 302 387 845 498 552 464 235 757 110 238 65 39 263 785 16 5828
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: December 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 30 3 1 1 1 2 1 0 0 0 0 0 0 0 0 1 1 1 42
1-<2 16 16 9 13 6 1 1 0 0 0 1 0 0 0 0 0 0 0 63
2-<3 42 0 47 35 54 19 8 2 1 0 6 1 1 0 0 1 2 0 219
3-<4 65 0 3 67 46 87 51 22 10 7 12 1 1 0 1 1 0 0 374
4-<5 99 0 0 1 102 61 77 45 26 8 27 2 4 2 0 2 0 1 457
5-<6 217 0 0 7 17 315 101 200 137 37 245 6 11 2 1 30 13 0 1339
6-<7 68 0 0 2 2 5 111 56 97 33 42 4 10 2 1 6 3 0 442
7-<8 58 0 0 1 2 3 6 102 54 55 80 9 15 2 5 9 5 0 406
8-<9 52 1 1 0 2 2 6 6 90 29 79 12 32 8 3 14 7 1 345
9-<10 33 0 0 0 1 1 0 1 3 40 25 18 13 9 2 13 3 0 162
10-<11 120 0 0 0 0 9 0 4 7 11 256 24 104 29 21 167 122 3 877
11-<12 9 0 0 0 0 1 0 1 0 1 1 17 7 9 10 13 11 0 80
12-<13 15 0 0 0 0 0 0 0 1 0 1 0 21 7 9 14 23 1 92
13-<14 2 0 0 0 0 0 0 0 0 2 0 1 0 3 3 13 8 0 32
14-<15 8 0 0 0 0 0 0 0 0 0 1 0 0 0 3 4 17 0 33
15-<16 28 0 0 0 0 0 0 0 1 0 6 0 2 0 0 43 84 0 164
>=16 108 0 0 0 0 1 0 1 1 0 4 0 0 2 0 14 566 4 701
Total 970 20 61 127 233 507 362 440 428 223 786 95 221 75 59 345 865 11 5828
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 was implemented in place of quota sampling from the September 2018 round onwards. Consequent changes in reporting the results of the survey are stated in the footnote to the respective tables. Further, city-wise sample size was revised in proportion to number of households of each city as per Census 2011, keeping the overall sample size 6,000.

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