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Date : Feb 06, 2020
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the January 2020 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 5,868 urban households.

Highlights:

i. After a sharp pick up in November 2019, households’ inflation perceptions and expectations moderated in January 2020, though they remained higher than the earlier part of the year. Median inflation expectations over three months and one year horizons eased by 60 basis points and 70 basis points, respectively (Chart 1a, Chart 1b & Table 2).

ii. Most households expect that prices will continue to rise. However, the proportion of households expecting increase in food prices has declined, albeit marginally (Table 1a & Table 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 Dec-18 Jul-19 Sep-19 Nov-19 Jan-20
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 72.9 1.04 77.9 0.95 79.3 0.94 80.7 0.90 83.2 0.87
Price increase more than current rate 46.2 1.14 49.8 1.15 49.0 1.23 52.4 1.22 56.1 1.16
Price increase similar to current rate 23.3 0.96 24.7 0.98 25.1 1.04 23.4 0.96 23.4 0.91
Price increase less than current rate 3.4 0.39 3.4 0.38 5.2 0.51 4.9 0.55 3.6 0.37
No changes in prices 21.2 0.98 18.5 0.88 18.6 0.92 17.3 0.84 14.4 0.81
Decline in prices 5.8 0.46 3.6 0.39 2.1 0.29 1.9 0.26 2.4 0.31
Food Product                    
Prices will increase 70.7 0.98 80.0 0.87 81.4 0.86 81.8 0.80 81.7 0.80
Price increase more than current rate 42.7 1.08 48.5 1.09 52.9 1.14 54.8 1.14 56.0 1.11
Price increase similar to current rate 22.4 0.87 25.7 1.01 21.4 0.88 21.0 0.85 20.1 0.85
Price increase less than current rate 5.7 0.48 5.8 0.47 7.1 0.59 6.0 0.54 5.5 0.45
No changes in prices 17.2 0.79 13.8 0.75 13.2 0.78 12.3 0.65 11.2 0.67
Decline in prices 12.0 0.65 6.2 0.52 5.4 0.45 5.9 0.48 7.2 0.50
Non- Food Product                    
Prices will increase 67.6 1.00 73.8 0.97 74.7 0.95 75.3 0.93 77.8 0.91
Price increase more than current rate 40.8 1.08 43.1 1.14 45.5 1.16 48.0 1.14 51.4 1.15
Price increase similar to current rate 21.6 0.89 25.2 0.93 21.8 0.90 21.1 0.86 21.2 0.88
Price increase less than current rate 5.3 0.47 5.5 0.46 7.3 0.57 6.1 0.53 5.3 0.43
No changes in prices 20.5 0.85 20.4 0.90 20.8 0.88 20.5 0.83 17.7 0.82
Decline in prices 11.9 0.63 5.8 0.48 4.5 0.42 4.3 0.39 4.4 0.39
Household Durables                    
Prices will increase 56.8 1.08 57.9 1.07 56.2 1.07 55.2 1.09 60.3 1.02
Price increase more than current rate 34.8 1.08 33.7 1.05 33.9 1.11 35.4 1.06 37.9 1.03
Price increase similar to current rate 17.9 0.85 19.6 0.81 17.3 0.80 15.2 0.73 17.5 0.76
Price increase less than current rate 4.1 0.39 4.6 0.41 4.9 0.45 4.6 0.44 4.8 0.43
No changes in prices 24.8 0.91 28.2 0.96 28.5 0.96 29.1 0.93 26.8 0.91
Decline in prices 18.4 0.77 13.9 0.67 15.4 0.73 15.8 0.73 12.9 0.65
Cost of Housing                    
Prices will increase 69.1 1.03 68.6 1.01 68.1 1.10 68.5 1.09 69.7 1.04
Price increase more than current rate 46.5 1.06 45.2 1.04 45.2 1.23 48.3 1.19 48.4 1.10
Price increase similar to current rate 18.2 0.79 19.4 0.82 17.9 0.81 16.4 0.77 17.3 0.74
Price increase less than current rate 4.5 0.41 4.0 0.38 5.0 0.44 3.8 0.41 4.0 0.40
No changes in prices 22.2 0.94 22.8 0.90 23.1 0.98 24.0 0.99 22.0 0.95
Decline in prices 8.6 0.57 8.6 0.58 8.7 0.59 7.4 0.53 8.3 0.54
Cost of Services                    
Prices will increase 65.7 1.10 66.1 1.03 63.5 1.04 65.8 1.05 72.5 0.98
Price increase more than current rate 40.2 1.11 39.8 1.07 40.2 1.15 43.6 1.14 46.4 1.13
Price increase similar to current rate 21.2 0.82 21.6 0.83 18.1 0.76 17.7 0.79 21.1 0.81
Price increase less than current rate 4.3 0.41 4.7 0.42 5.3 0.45 4.5 0.46 4.9 0.43
No changes in prices 28.2 1.02 28.7 0.94 31.6 1.00 29.5 1.01 23.4 0.90
Decline in prices 6.1 0.45 5.3 0.46 4.8 0.42 4.7 0.43 4.1 0.38
Note:
1. The table provides estimates and standard errors for qualitative responses.
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 Dec-18 Jul-19 Sep-19 Nov-19 Jan-20
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 83.8 0.82 83.8 0.87 87.0 0.78 89.1 0.71 88.1 0.74
Price increase more than current rate 57.5 1.15 56.8 1.15 57.3 1.29 64.0 1.25 63.6 1.13
Price increase similar to current rate 23.3 1.00 24.1 1.01 25.1 1.07 21.5 0.96 21.4 0.88
Price increase less than current rate 3.0 0.37 2.9 0.35 4.6 0.47 3.6 0.44 3.2 0.37
No changes in prices 11.3 0.73 12.6 0.78 10.6 0.73 8.9 0.64 9.5 0.67
Decline in prices 4.9 0.43 3.6 0.40 2.4 0.31 2.0 0.28 2.4 0.30
Food Product                    
Prices will increase 80.0 0.82 81.9 0.80 83.0 0.86 86.2 0.74 84.8 0.73
Price increase more than current rate 50.6 1.08 49.3 1.16 52.2 1.23 58.9 1.24 56.0 1.14
Price increase similar to current rate 24.7 0.93 27.7 0.98 25.4 0.96 22.4 0.90 24.3 0.93
Price increase less than current rate 4.7 0.43 4.8 0.42 5.4 0.53 5.0 0.49 4.5 0.40
No changes in prices 12.1 0.68 12.0 0.67 11.9 0.76 9.4 0.61 9.8 0.59
Decline in prices 7.9 0.52 6.1 0.49 5.2 0.43 4.4 0.39 5.4 0.42
Non- Food Product                    
Prices will increase 76.4 0.92 78.1 0.89 78.6 0.94 81.0 0.82 81.6 0.80
Price increase more than current rate 47.5 1.09 46.1 1.11 48.1 1.25 53.5 1.23 53.1 1.14
Price increase similar to current rate 24.2 0.92 27.1 0.97 24.4 0.98 22.6 0.92 23.5 0.88
Price increase less than current rate 4.7 0.43 4.9 0.44 6.1 0.52 4.9 0.51 5.1 0.44
No changes in prices 15.8 0.78 16.6 0.80 16.6 0.85 15.5 0.72 14.1 0.72
Decline in prices 7.7 0.54 5.3 0.47 4.8 0.43 3.6 0.36 4.3 0.39
Household Durables                    
Prices will increase 66.9 1.02 66.2 1.01 64.1 1.04 65.4 1.00 68.0 0.96
Price increase more than current rate 42.0 1.09 39.8 1.08 39.0 1.17 42.7 1.16 44.0 1.10
Price increase similar to current rate 20.4 0.84 22.0 0.91 19.4 0.82 18.1 0.80 20.0 0.80
Price increase less than current rate 4.5 0.40 4.3 0.39 5.6 0.49 4.6 0.46 4.0 0.40
No changes in prices 20.1 0.91 23.0 0.89 24.2 0.90 22.5 0.84 21.2 0.84
Decline in prices 13.0 0.69 10.9 0.61 11.8 0.64 12.1 0.62 10.7 0.60
Cost of Housing                    
Prices will increase 79.6 0.85 76.9 0.89 77.3 0.89 80.0 0.92 77.8 0.89
Price increase more than current rate 55.9 1.00 52.1 1.00 51.8 1.15 57.1 1.20 54.7 1.09
Price increase similar to current rate 19.8 0.78 21.5 0.83 20.6 0.85 19.1 0.85 19.0 0.83
Price increase less than current rate 3.9 0.39 3.4 0.34 4.8 0.45 3.9 0.41 4.1 0.39
No changes in prices 13.7 0.74 15.3 0.75 15.5 0.73 13.9 0.76 15.0 0.77
Decline in prices 6.7 0.50 7.8 0.55 7.2 0.53 6.1 0.48 7.2 0.50
Cost of Services                    
Prices will increase 77.9 0.88 77.1 0.93 79.0 0.93 80.9 0.87 82.5 0.79
Price increase more than current rate 49.0 1.11 47.2 1.12 50.0 1.23 53.7 1.23 54.6 1.15
Price increase similar to current rate 24.1 0.90 25.2 0.95 22.7 0.93 22.3 0.86 23.0 0.87
Price increase less than current rate 4.8 0.44 4.6 0.43 6.3 0.51 4.9 0.51 4.9 0.44
No changes in prices 17.1 0.82 17.8 0.82 17.2 0.85 15.9 0.77 14.6 0.72
Decline in prices 5.0 0.44 5.2 0.47 3.8 0.38 3.2 0.36 2.9 0.33
Note:
1. The table provides estimates and standard errors for qualitative responses.
2. Constituent items may not add up to the corresponding total, due to rounding off.

Table 2: Inflation Expectations of Various Groups: January 2020
  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 8.7 0.11 7.6 0.19 9.5 0.11 8.6 0.16 9.3 0.13 9.2 0.25
Gender-wise                        
Male 8.8 0.13 7.6 0.26 9.6 0.13 8.6 0.24 9.2 0.17 9.0 0.27
Female 8.7 0.14 7.7 0.24 9.6 0.14 8.7 0.22 9.4 0.17 9.4 0.37
Category-wise                        
Financial Sector Employees 8.8 0.56 7.8 0.78 8.9 0.57 7.9 0.60 9.5 0.60 9.2 0.71
Other Employees 8.5 0.19 7.4 0.35 9.4 0.20 8.3 0.26 9.1 0.24 8.7 0.25
Self Employed 9.0 0.22 8.2 0.45 9.8 0.23 9.2 0.47 9.2 0.28 9.1 0.48
Homemaker 8.7 0.16 7.8 0.24 9.6 0.17 8.7 0.23 9.4 0.19 9.3 0.39
Retired Persons 9.5 0.36 8.7 0.59 10.4 0.35 10.0 0.50 10.0 0.41 10.1 0.31
Daily Workers 8.9 0.27 7.5 0.52 9.7 0.26 8.9 0.52 9.1 0.30 9.2 0.54
Other category 8.4 0.23 7.0 0.27 9.5 0.23 8.1 0.25 9.6 0.26 9.6 0.39
Age Group-wise                        
Up to 25 years 7.7 0.18 6.4 0.25 8.8 0.19 7.8 0.18 8.8 0.22 8.5 0.26
25 to 30 years 8.3 0.19 7.0 0.25 9.1 0.19 8.1 0.23 9.2 0.23 8.7 0.29
30 to 35 years 8.7 0.19 8.0 0.30 9.4 0.19 8.9 0.37 9.2 0.25 9.3 0.43
35 to 40 years 8.9 0.20 8.0 0.35 9.7 0.21 9.1 0.40 9.6 0.24 9.7 0.37
40 to 45 years 9.0 0.23 7.8 0.38 9.9 0.24 9.0 0.41 9.6 0.28 9.7 0.47
45 to 50 years 8.8 0.23 8.1 0.42 9.7 0.24 9.0 0.53 9.4 0.28 9.3 0.54
50 to 55 years 9.1 0.31 8.4 0.52 9.8 0.31 9.3 0.66 9.7 0.35 9.9 0.48
55 to 60 years 9.3 0.32 8.5 0.64 10.3 0.33 9.9 0.54 9.8 0.38 10.0 0.50
60 years and above 9.9 0.29 9.3 0.69 10.7 0.29 10.2 0.38 10.0 0.35 10.0 0.38
City-wise                        
Ahmedabad 10.7 0.43 10.4 0.39 11.8 0.41 12.3 1.48 11.6 0.41 12.4 1.61
Bengaluru 7.2 0.27 5.9 0.21 8.2 0.28 7.3 0.33 8.5 0.32 7.9 0.33
Bhopal 8.8 0.74 8.6 1.35 10.0 0.70 9.7 0.84 9.2 0.56 9.8 0.79
Bhubaneswar 8.1 0.49 6.4 0.92 9.3 0.56 8.1 0.80 9.9 0.76 9.7 0.90
Chennai 9.4 0.41 9.4 0.96 10.6 0.48 10.4 0.70 10.9 0.44 11.0 0.77
Delhi 8.3 0.23 7.1 0.39 9.0 0.23 8.1 0.32 9.0 0.27 8.9 0.38
Guwahati 9.2 0.82 8.5 1.78 9.0 1.02 8.2 1.70 8.6 1.06 8.0 1.82
Hyderabad 9.3 0.52 8.3 1.02 10.3 0.50 9.5 0.93 10.9 0.43 10.7 0.97
Jaipur 7.7 0.39 6.9 0.56 8.3 0.44 7.7 0.57 7.3 0.47 7.3 0.78
Kolkata 10.0 0.31 9.5 0.71 10.9 0.34 10.4 0.73 10.8 0.40 10.8 0.79
Lucknow 7.6 0.53 6.9 0.55 8.3 0.57 7.7 0.57 7.6 0.70 7.7 0.64
Mumbai 8.5 0.31 7.3 0.48 9.2 0.34 8.3 0.42 7.7 0.47 7.6 0.70
Nagpur 8.2 0.42 7.1 0.77 9.8 0.46 8.7 0.78 10.1 0.40 9.9 0.53
Patna 6.9 0.32 6.6 0.39 7.3 0.35 7.0 0.39 7.5 0.60 7.7 0.55
Thiruvananthapuram 6.8 0.45 5.5 0.23 8.0 0.50 6.6 0.54 9.3 0.59 8.4 0.76
Chandigarh 9.6 0.69 8.9 0.70 9.4 0.51 8.7 0.48 8.7 0.86 8.8 0.67
Ranchi 7.5 0.48 6.9 0.53 7.9 0.64 7.6 0.73 7.9 0.74 7.9 1.02
Raipur 9.0 0.56 7.9 0.74 10.0 0.56 9.1 0.82 9.2 1.01 9.3 1.11
Note: The table provides estimates and standard errors for quantitative responses.

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
Dec-18 8.3 0.11 7.1 0.18 9.1 0.11 8.2 0.15 8.6 0.13 8.5 0.17
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
Nov-19 9.1 0.10 8.2 0.17 9.8 0.11 9.2 0.23 9.7 0.12 9.9 0.19
Jan-20 8.7 0.11 7.6 0.19 9.5 0.11 8.6 0.16 9.3 0.13 9.2 0.25
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
Dec-18 62.9 64.0 55.3 62.4 64.3
Jul-19 66.1 65.5 55.3 60.8 65.0
Sep-19 62.7 62.1 50.2 56.8 61.2
Nov-19 64.7 65.1 51.0 60.7 63.1
Jan-20 66.1 66.2 53.4 59.3 64.5
One Year Ahead
Dec-18 72.5 71.7 62.5 70.3 72.9
Jul-19 72.3 71.2 61.5 70.0 72.4
Sep-19 70.7 67.5 56.8 65.5 70.0
Nov-19 73.9 70.9 57.8 69.7 72.3
Jan-20 72.2 70.9 60.3 67.8 72.8
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: January 2020
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 14 3 2 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 22
1-<2 4 35 20 6 1 0 0 0 0 0 0 0 0 0 0 0 0 0 66
2-<3 2 12 83 63 41 9 0 1 0 0 1 0 0 0 0 1 1 0 214
3-<4 0 3 6 135 73 57 8 2 0 0 2 0 1 0 0 1 0 0 288
4-<5 1 3 7 18 213 145 82 14 10 0 1 0 2 0 0 0 0 1 497
5-<6 0 1 6 19 25 521 192 247 77 8 57 1 3 0 0 2 1 1 1161
6-<7 0 0 2 2 4 9 200 104 78 14 19 1 3 0 0 1 0 0 437
7-<8 0 0 0 3 2 15 6 159 110 55 41 4 3 0 1 0 0 1 400
8-<9 0 0 0 2 2 6 5 5 164 77 121 9 12 5 0 2 2 0 412
9-<10 0 0 0 0 0 3 1 1 1 72 56 12 16 1 4 4 4 0 175
10-<11 0 0 0 0 0 25 7 13 22 5 386 49 157 38 11 189 53 0 955
11-<12 0 0 0 0 0 0 0 0 0 1 1 17 15 10 0 6 3 0 53
12-<13 0 0 0 0 0 2 0 0 2 0 6 1 28 5 7 29 13 0 93
13-<14 0 0 0 0 0 0 0 0 0 0 1 0 0 8 3 9 2 0 23
14-<15 0 0 0 0 0 0 0 0 0 0 0 0 0 3 9 3 10 0 25
15-<16 0 0 0 0 0 3 0 0 0 0 5 0 3 1 1 84 112 0 209
>=16 0 0 0 0 0 1 0 0 2 1 14 0 2 2 1 12 797 6 838
Total 21 57 126 248 362 797 501 547 466 233 711 94 245 73 37 343 998 9 5868
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: January 2020
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 11 3 2 2 1 0 0 1 0 0 1 0 0 0 0 0 1 0 22
1-<2 16 14 21 9 4 1 1 0 0 0 0 0 0 0 0 0 0 0 66
2-<3 27 3 49 37 51 29 7 4 2 0 2 0 0 0 0 1 1 1 214
3-<4 46 1 2 63 51 69 28 12 5 1 6 0 2 0 0 2 0 0 288
4-<5 83 0 4 5 112 80 97 47 36 13 13 0 2 0 0 2 2 1 497
5-<6 150 0 3 8 14 283 115 207 144 28 175 4 8 2 2 11 7 0 1161
6-<7 55 0 1 2 3 4 113 53 100 36 46 3 9 4 1 4 3 0 437
7-<8 40 0 0 0 2 3 3 94 56 81 84 10 15 2 2 5 2 1 400
8-<9 48 0 0 0 1 2 2 1 97 45 136 16 37 7 2 14 4 0 412
9-<10 16 0 0 0 0 1 0 0 0 39 36 26 30 4 5 12 6 0 175
10-<11 101 0 0 0 0 10 1 7 5 4 262 26 117 23 28 214 156 1 955
11-<12 3 0 0 0 0 0 0 0 0 0 2 5 7 11 8 8 9 0 53
12-<13 12 0 0 1 0 0 0 0 2 0 2 0 16 3 8 24 25 0 93
13-<14 2 0 0 0 0 1 0 0 0 0 0 0 0 4 2 10 4 0 23
14-<15 3 0 0 0 0 0 0 0 0 0 0 0 0 0 4 4 14 0 25
15-<16 24 0 0 0 0 1 0 1 0 0 6 0 1 0 0 53 122 1 209
>=16 60 0 0 0 0 0 0 0 0 0 10 0 1 1 1 12 744 9 838
Total 697 21 82 127 239 484 367 427 447 247 781 90 245 61 63 376 1100 14 5868
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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