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Date : Aug 06, 2020

Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the July 2020 round of the Inflation Expectations Survey of Households (IESH)¹. In view of the Covid-19 pandemic, the survey was conducted through telephonic interviews during July 1-12, 2020 in 18 major cities. The results are based on responses from 5,411 urban households.

Highlights:

i. Households’ median inflation perception increased by 60 basis points in July 2020 as compared with the May 2020 survey round [Charts 1a and 1b; Table 3].

ii. Inflation expectations for both three months and one year horizons increased by 10 basis points each, over the previous round; three months ahead median inflation expectation stood higher than that for one year horizon for the second consecutive survey round [Charts 1a and 1b; Table 3].

iii. Households’ expectations on price changes at aggregate level are closely aligned with those of food products and cost of services. Higher expectation of food prices over three month horizon vis-à-vis one year period contributed to higher short term inflation expectations [Tables 1a and 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	Jul-19		Jan-20		Mar-20		May-20		Jul-20
General	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE
Prices will increase	77.9	0.95	83.2	0.87	83.3	0.79	85.3	0.73	83.5	0.92
Price increase more than current rate	49.8	1.15	56.1	1.16	52.5	1.10	56.0	1.02	52.2	1.14
Price increase similar to current rate	24.7	0.98	23.4	0.91	25.6	0.99	23.5	0.89	26.0	1.03
Price increase less than current rate	3.4	0.38	3.6	0.37	5.2	0.56	5.8	0.49	5.3	0.54
No changes in prices	18.5	0.88	14.4	0.81	14.9	0.76	12.4	0.69	14.0	0.84
Decline in prices	3.6	0.39	2.4	0.31	1.8	0.25	2.3	0.32	2.5	0.43
Food Product
Prices will increase	80.0	0.87	81.7	0.80	81.9	0.81	84.6	0.75	82.3	0.86
Price increase more than current rate	48.5	1.09	56.0	1.11	55.4	1.02	58.6	1.00	54.7	1.08
Price increase similar to current rate	25.7	1.01	20.1	0.85	20.0	0.88	20.0	0.82	21.9	0.89
Price increase less than current rate	5.8	0.47	5.5	0.45	6.5	0.56	6.0	0.49	5.7	0.47
No changes in prices	13.8	0.75	11.2	0.67	12.4	0.68	10.7	0.64	13.2	0.75
Decline in prices	6.2	0.52	7.2	0.50	5.7	0.43	4.7	0.45	4.5	0.56
Non- Food Product
Prices will increase	73.8	0.97	77.8	0.91	77.8	0.87	76.7	0.88	79.1	0.99
Price increase more than current rate	43.1	1.14	51.4	1.15	50.8	1.00	49.5	0.99	48.3	1.11
Price increase similar to current rate	25.2	0.93	21.2	0.88	20.8	0.89	20.8	0.82	24.6	0.98
Price increase less than current rate	5.5	0.46	5.3	0.43	6.2	0.50	6.4	0.50	6.2	0.51
No changes in prices	20.4	0.90	17.7	0.82	17.7	0.79	17.8	0.79	15.2	0.87
Decline in prices	5.8	0.48	4.4	0.39	4.5	0.42	5.5	0.49	5.6	0.59
Household Durables
Prices will increase	57.9	1.07	60.3	1.02	64.5	1.02	55.1	1.04	57.8	1.14
Price increase more than current rate	33.7	1.05	37.9	1.03	42.3	1.03	33.6	0.96	34.7	1.07
Price increase similar to current rate	19.6	0.81	17.5	0.76	17.2	0.80	16.4	0.76	17.6	0.87
Price increase less than current rate	4.6	0.41	4.8	0.43	5.0	0.44	5.1	0.44	5.4	0.48
No changes in prices	28.2	0.96	26.8	0.91	24.2	0.90	29.7	0.94	28.4	1.00
Decline in prices	13.9	0.67	12.9	0.65	11.2	0.63	15.2	0.76	13.8	0.86
Cost of Housing
Prices will increase	68.6	1.01	69.7	1.04	71.0	1.07	48.6	1.01	46.9	1.08
Price increase more than current rate	45.2	1.04	48.4	1.10	49.5	1.10	30.2	0.93	28.1	0.98
Price increase similar to current rate	19.4	0.82	17.3	0.74	17.4	0.78	13.6	0.69	14.9	0.78
Price increase less than current rate	4.0	0.38	4.0	0.40	4.2	0.39	4.8	0.45	3.9	0.39
No changes in prices	22.8	0.90	22.0	0.95	22.1	0.96	30.3	0.93	29.9	1.03
Decline in prices	8.6	0.58	8.3	0.54	6.9	0.52	21.1	0.83	23.2	0.95
Cost of Services
Prices will increase	66.1	1.03	72.5	0.98	70.8	0.99	68.3	0.97	70.1	1.06
Price increase more than current rate	39.8	1.07	46.4	1.13	46.2	1.02	43.2	0.99	43.3	1.11
Price increase similar to current rate	21.6	0.83	21.1	0.81	19.3	0.84	19.3	0.79	21.2	0.92
Price increase less than current rate	4.7	0.42	4.9	0.43	5.2	0.44	5.9	0.46	5.6	0.49
No changes in prices	28.7	0.94	23.4	0.90	25.9	0.94	27.4	0.93	25.7	0.99
Decline in prices	5.3	0.46	4.1	0.38	3.3	0.34	4.4	0.42	4.2	0.52
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	Jul-19		Jan-20		Mar-20		May-20		Jul-20
General	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE
Prices will increase	83.8	0.87	88.1	0.74	89.2	0.65	85.6	0.73	84.6	0.87
Price increase more than current rate	56.8	1.15	63.6	1.13	60.7	1.07	57.1	1.00	55.9	1.12
Price increase similar to current rate	24.1	1.01	21.4	0.88	24.8	1.00	23.8	0.88	24.3	0.93
Price increase less than current rate	2.9	0.35	3.2	0.37	3.7	0.42	4.7	0.43	4.4	0.46
No changes in prices	12.6	0.78	9.5	0.67	9.0	0.62	11.9	0.67	12.9	0.82
Decline in prices	3.6	0.40	2.4	0.30	1.8	0.26	2.5	0.33	2.5	0.35
Food Product
Prices will increase	81.9	0.80	84.8	0.73	85.6	0.73	77.3	0.86	75.3	1.00
Price increase more than current rate	49.3	1.16	56.0	1.14	55.6	1.10	46.9	1.01	45.2	1.10
Price increase similar to current rate	27.7	0.98	24.3	0.93	24.3	0.93	24.2	0.88	24.1	0.96
Price increase less than current rate	4.8	0.42	4.5	0.40	5.7	0.49	6.3	0.51	6.0	0.50
No changes in prices	12.0	0.67	9.8	0.59	10.3	0.64	15.7	0.74	17.4	0.88
Decline in prices	6.1	0.49	5.4	0.42	4.1	0.37	6.9	0.52	7.3	0.63
Non- Food Product
Prices will increase	78.1	0.89	81.6	0.80	82.3	0.81	73.3	0.92	74.3	1.04
Price increase more than current rate	46.1	1.11	53.1	1.14	53.6	1.08	42.6	0.99	44.0	1.13
Price increase similar to current rate	27.1	0.97	23.5	0.88	23.4	0.92	23.9	0.87	24.3	0.92
Price increase less than current rate	4.9	0.44	5.1	0.44	5.3	0.47	6.8	0.51	6.0	0.50
No changes in prices	16.6	0.80	14.1	0.72	14.2	0.73	20.7	0.84	18.7	0.97
Decline in prices	5.3	0.47	4.3	0.39	3.4	0.36	6.0	0.49	7.0	0.71
Household Durables
Prices will increase	66.2	1.01	68.0	0.96	70.8	1.02	59.6	1.03	62.4	1.14
Price increase more than current rate	39.8	1.08	44.0	1.10	46.6	1.09	34.8	0.99	35.6	1.08
Price increase similar to current rate	22.0	0.91	20.0	0.80	19.8	0.86	19.1	0.79	21.1	0.91
Price increase less than current rate	4.3	0.39	4.0	0.40	4.4	0.42	5.7	0.47	5.8	0.51
No changes in prices	23.0	0.89	21.2	0.84	19.7	0.87	28.4	0.93	26.0	1.01
Decline in prices	10.9	0.61	10.7	0.60	9.5	0.59	12.1	0.67	11.6	0.81
Cost of Housing
Prices will increase	76.9	0.89	77.8	0.89	79.9	0.90	59.7	1.00	57.4	1.10
Price increase more than current rate	52.1	1.00	54.7	1.09	56.5	1.03	36.9	0.98	34.7	1.10
Price increase similar to current rate	21.5	0.83	19.0	0.83	19.6	0.82	17.3	0.77	18.4	0.88
Price increase less than current rate	3.4	0.34	4.1	0.39	3.8	0.39	5.5	0.46	4.3	0.43
No changes in prices	15.3	0.75	15.0	0.77	14.5	0.78	25.1	0.89	26.1	1.01
Decline in prices	7.8	0.55	7.2	0.50	5.5	0.47	15.2	0.73	16.5	0.83
Cost of Services
Prices will increase	77.1	0.93	82.5	0.79	81.4	0.85	74.4	0.91	75.6	1.06
Price increase more than current rate	47.2	1.12	54.6	1.15	53.0	1.09	44.6	0.98	46.1	1.11
Price increase similar to current rate	25.2	0.95	23.0	0.87	23.3	0.90	23.1	0.85	23.7	0.90
Price increase less than current rate	4.6	0.43	4.9	0.44	5.0	0.44	6.7	0.50	5.8	0.50
No changes in prices	17.8	0.82	14.6	0.72	16.0	0.81	22.1	0.87	20.5	0.97
Decline in prices	5.2	0.47	2.9	0.33	2.7	0.30	3.5	0.38	3.9	0.57
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: July 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	10.0	0.11	9.9	0.21	10.8	0.11	10.5	0.06	9.8	0.14	10.3	0.08
Gender-wise
Male	9.9	0.14	9.5	0.39	10.7	0.13	10.3	0.08	9.7	0.17	10.2	0.11
Female	9.8	0.14	9.9	0.22	11.0	0.15	10.6	0.08	9.9	0.19	10.3	0.10
Category-wise
Financial Sector Employees	9.1	0.41	8.3	0.38	9.8	0.48	9.8	0.69	8.6	0.50	9.5	0.92
Other Employees	9.7	0.19	9.5	0.48	10.6	0.20	10.4	0.11	10.0	0.24	10.3	0.17
Self Employed	9.9	0.21	9.8	0.42	10.5	0.22	10.3	0.14	9.5	0.30	10.1	0.24
Homemaker	9.8	0.17	9.9	0.25	11.0	0.18	10.6	0.11	9.8	0.22	10.3	0.12
Retired Persons	10.5	0.29	10.2	0.27	11.2	0.28	10.6	0.18	10.3	0.35	10.5	0.18
Daily Workers	10.1	0.22	9.7	0.44	11.0	0.22	10.5	0.15	9.7	0.33	10.2	0.24
Other category	9.5	0.22	8.8	0.41	10.3	0.22	10.1	0.22	9.6	0.29	9.8	0.44
Age Group-wise
Up to 25 years	9.6	0.19	9.0	0.42	10.5	0.18	10.3	0.11	9.7	0.23	10.0	0.32
25 to 30 years	9.8	0.21	9.6	0.43	10.8	0.22	10.5	0.15	9.8	0.26	10.2	0.20
30 to 35 years	9.7	0.21	9.7	0.41	10.7	0.22	10.5	0.13	9.7	0.28	10.2	0.18
35 to 40 years	9.7	0.19	9.7	0.42	10.9	0.20	10.5	0.12	9.9	0.24	10.3	0.15
40 to 45 years	10.4	0.21	10.2	0.16	11.1	0.21	10.6	0.15	10.0	0.33	10.4	0.20
45 to 50 years	10.4	0.31	10.0	0.44	10.9	0.35	10.4	0.28	9.9	0.38	10.2	0.41
50 to 55 years	10.3	0.24	10.1	0.23	10.7	0.32	10.2	0.37	9.7	0.30	10.2	0.35
55 to 60 years	10.5	0.30	10.3	0.16	11.2	0.28	10.7	0.26	9.7	0.38	10.4	0.15
60 years and above	10.8	0.23	10.4	0.13	11.6	0.22	11.0	0.41	10.5	0.32	10.8	0.27
City-wise
Ahmedabad	10.5	0.36	10.2	0.26	11.5	0.35	11.3	0.70	11.0	0.40	11.0	0.63
Bengaluru	10.1	0.31	10.3	0.11	11.0	0.30	10.7	0.24	10.1	0.36	10.5	0.21
Bhopal	10.1	0.61	10.2	0.57	10.6	0.70	10.5	0.51	10.4	0.76	10.8	1.06
Bhubaneswar	8.9	0.55	9.0	1.28	11.5	0.55	11.4	0.98	11.3	0.62	11.5	1.15
Chennai	10.9	0.39	10.7	0.30	12.1	0.37	13.2	1.48	11.5	0.49	13.9	1.34
Delhi	8.0	0.20	7.1	0.28	8.8	0.21	8.1	0.28	8.4	0.24	8.0	0.28
Guwahati	13.5	0.74	15.9	0.97	13.4	0.81	15.8	0.74	11.8	1.03	14.8	1.91
Hyderabad	11.4	0.75	11.8	2.12	12.4	0.73	14.8	1.95	10.3	1.04	12.8	2.68
Jaipur	10.9	0.58	10.7	0.80	11.6	0.60	11.5	1.70	9.7	0.75	10.4	1.01
Kolkata	11.4	0.28	10.7	0.25	12.3	0.27	13.9	1.24	11.5	0.34	13.4	1.38
Lucknow	10.2	0.54	10.0	0.55	10.7	0.55	10.5	0.44	9.7	0.66	10.2	0.50
Mumbai	10.1	0.26	9.2	0.39	10.9	0.27	10.3	0.23	8.8	0.35	9.2	0.54
Nagpur	8.4	0.52	7.4	0.32	10.2	0.50	9.3	0.56	10.3	0.53	10.5	0.25
Patna	8.4	0.49	8.4	0.96	9.1	0.56	9.1	0.94	8.0	0.72	8.0	0.97
Thiruvananthapuram	6.4	0.76	5.1	0.49	7.8	0.89	6.6	0.62	8.3	0.95	7.5	0.62
Chandigarh	10.1	0.60	9.7	0.76	9.9	0.66	9.9	0.64	9.1	0.69	9.4	0.91
Ranchi	8.5	0.68	7.7	0.89	9.3	0.66	8.6	0.79	8.6	0.86	8.9	0.87
Raipur	9.0	0.48	8.2	0.51	9.9	0.54	9.0	0.56	9.0	0.90	9.8	0.82
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
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
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
Mar-20	8.4	0.09	7.6	0.12	9.2	0.10	8.5	0.11	9.1	0.11	9.0	0.18
May-20	9.6	0.09	9.3	0.28	10.6	0.09	10.4	0.06	9.7	0.12	10.2	0.07
Jul-20	10.0	0.11	9.9	0.21	10.8	0.11	10.5	0.06	9.8	0.14	10.3	0.08
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
Jul-19	66.1	65.5	55.3	60.8	65.0
Jan-20	66.1	66.2	53.4	59.3	64.5
Mar-20	65.4	64.6	55.8	61.1	64.7
May-20	63.3	59.8	46.5	42.6	57.3
Jul-20	62.8	61.0	49.9	43.6	58.4
One Year Ahead
Jul-19	72.3	71.2	61.5	70.0	72.4
Jan-20	72.2	70.9	60.3	67.8	72.8
Mar-20	71.9	71.8	63.2	69.9	72.3
May-20	62.3	59.5	50.9	50.3	62.3
Jul-20	63.9	64.5	55.2	51.2	65.7
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: July 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	21	0	4	1	1	1	0	0	0	0	1	0	0	0	0	0	0	0	29
	1-<2	2	33	3	4	0	3	0	0	0	0	0	0	0	0	0	0	0	0	45
	2-<3	3	7	81	39	29	16	2	1	0	0	0	0	0	0	0	0	0	0	178
	3-<4	2	1	6	75	34	53	15	3	3	0	5	0	0	0	0	0	1	0	198
	4-<5	0	0	5	2	104	40	31	16	5	4	2	0	0	0	0	0	1	2	212
	5-<6	1	2	7	24	14	378	75	141	76	10	101	1	1	1	0	11	5	1	849
	6-<7	1	0	1	2	3	9	148	39	50	18	28	4	7	1	0	1	1	1	314
	7-<8	0	0	1	1	7	8	4	173	71	43	60	3	9	1	0	4	1	1	387
	8-<9	0	1	2	1	2	8	5	5	164	41	107	7	26	8	1	8	6	2	394
	9-<10	0	0	0	0	1	1	0	1	3	74	31	18	21	3	5	4	0	0	162
	10-<11	1	1	1	1	4	30	3	8	14	5	464	35	98	41	8	226	106	5	1051
	11-<12	0	0	0	0	0	0	1	0	0	1	0	20	5	5	5	3	1	0	41
	12-<13	0	0	1	1	0	0	0	3	1	1	3	0	34	5	10	22	14	0	95
	13-<14	0	0	0	0	0	0	0	0	0	0	0	0	0	5	4	4	8	0	21
	14-<15	0	0	0	0	0	0	0	0	0	0	1	0	0	0	12	4	11	0	28
	15-<16	0	0	1	0	0	2	1	1	1	0	18	0	2	0	0	102	160	0	288
	>=16	3	0	0	1	1	4	4	0	2	0	34	1	2	0	1	18	1038	10	1119
	Total	34	45	113	152	200	553	289	391	390	197	855	89	205	70	46	407	1353	22	5411
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: July 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	12	0	6	0	3	6	0	1	1	0	0	0	0	0	0	0	0	0	29
	1-<2	22	11	5	2	2	3	0	0	0	0	0	0	0	0	0	0	0	0	45
	2-<3	33	4	45	34	25	12	7	10	4	0	4	0	0	0	0	0	0	0	178
	3-<4	26	0	3	44	17	45	21	13	15	3	6	0	3	1	0	1	0	0	198
	4-<5	29	0	2	0	65	29	34	17	21	4	5	2	2	0	1	0	0	1	212
	5-<6	118	0	5	10	1	241	56	108	79	19	144	3	14	4	1	30	15	1	849
	6-<7	39	0	0	1	1	7	107	33	39	16	41	3	13	0	1	6	4	3	314
	7-<8	59	0	0	2	0	7	1	111	48	42	79	8	14	5	0	6	4	1	387
	8-<9	58	1	0	0	1	3	4	2	118	35	97	4	33	8	8	10	11	1	394
	9-<10	23	0	0	0	0	0	0	3	0	45	31	9	21	7	5	14	4	0	162
	10-<11	126	0	1	2	2	18	3	7	12	2	316	15	76	36	22	196	211	6	1051
	11-<12	6	0	0	0	0	0	0	0	0	0	1	14	2	6	3	6	2	1	41
	12-<13	14	0	0	0	0	0	0	0	0	2	3	0	19	4	12	23	18	0	95
	13-<14	4	0	0	0	0	0	0	0	0	0	1	0	0	3	0	4	9	0	21
	14-<15	2	0	0	0	0	0	0	0	0	0	0	0	0	1	10	3	12	0	28
	15-<16	42	0	0	0	0	2	2	1	1	0	9	0	1	1	1	56	171	1	288
	>=16	180	0	0	1	0	3	0	0	1	0	17	1	1	0	0	11	890	14	1119
	Total	793	16	67	96	117	376	235	306	339	168	754	59	199	76	64	366	1351	29	5411
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.