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Date : Oct 09, 2020
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the September 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 August 29 to September 10, 2020 in 18 major cities. The results are based on responses from 5,652 urban households2.

Highlights:

i. Households’ median inflation expectations remained elevated for both three months and one year ahead periods; their perception of current inflation and expectation for inflation over the next three months were, however, a shade lower than that in the previous round of the survey [Charts 1a and 1b; Table 3].

ii. More households expect general inflation to increase over the three months and one year ahead periods, but the share of respondents expecting higher food inflation over the next quarter declined in comparison with that in July 2020 [Tables 1a and 1b].

Chart 1

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-19 Mar-20 May-20 Jul-20 Sep-20
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 79.3 0.94 83.3 0.79 85.3 0.73 83.5 0.92 81.6 0.78
Price increase more than current rate 49.0 1.23 52.5 1.10 56.0 1.02 52.2 1.14 53.9 1.02
Price increase similar to current rate 25.1 1.04 25.6 0.99 23.5 0.89 26.0 1.03 22.5 0.84
Price increase less than current rate 5.2 0.51 5.2 0.56 5.8 0.49 5.3 0.54 5.2 0.46
No changes in prices 18.6 0.92 14.9 0.76 12.4 0.69 14.0 0.84 15.9 0.74
Decline in prices 2.1 0.29 1.8 0.25 2.3 0.32 2.5 0.43 2.5 0.31
Food Product                    
Prices will increase 81.4 0.86 81.9 0.81 84.6 0.75 82.3 0.86 80.4 0.80
Price increase more than current rate 52.9 1.14 55.4 1.02 58.6 1.00 54.7 1.08 52.6 1.00
Price increase similar to current rate 21.4 0.88 20.0 0.88 20.0 0.82 21.9 0.89 21.2 0.81
Price increase less than current rate 7.1 0.59 6.5 0.56 6.0 0.49 5.7 0.47 6.6 0.51
No changes in prices 13.2 0.78 12.4 0.68 10.7 0.64 13.2 0.75 14.3 0.70
Decline in prices 5.4 0.45 5.7 0.43 4.7 0.45 4.5 0.56 5.3 0.46
Non- Food Product                    
Prices will increase 74.7 0.95 77.8 0.87 76.7 0.88 79.1 0.99 75.8 0.87
Price increase more than current rate 45.5 1.16 50.8 1.00 49.5 0.99 48.3 1.11 47.3 0.99
Price increase similar to current rate 21.8 0.90 20.8 0.89 20.8 0.82 24.6 0.98 21.9 0.82
Price increase less than current rate 7.3 0.57 6.2 0.50 6.4 0.50 6.2 0.51 6.6 0.50
No changes in prices 20.8 0.88 17.7 0.79 17.8 0.79 15.2 0.87 19.2 0.80
Decline in prices 4.5 0.42 4.5 0.42 5.5 0.49 5.6 0.59 5.0 0.45
Household Durables                    
Prices will increase 56.2 1.07 64.5 1.02 55.1 1.04 57.8 1.14 56.3 1.02
Price increase more than current rate 33.9 1.11 42.3 1.03 33.6 0.96 34.7 1.07 35.0 0.96
Price increase similar to current rate 17.3 0.80 17.2 0.80 16.4 0.76 17.6 0.87 15.8 0.74
Price increase less than current rate 4.9 0.45 5.0 0.44 5.1 0.44 5.4 0.48 5.5 0.47
No changes in prices 28.5 0.96 24.2 0.90 29.7 0.94 28.4 1.00 30.7 0.94
Decline in prices 15.4 0.73 11.2 0.63 15.2 0.76 13.8 0.86 13.1 0.69
Cost of Housing                    
Prices will increase 68.1 1.10 71.0 1.07 48.6 1.01 46.9 1.08 51.8 0.98
Price increase more than current rate 45.2 1.23 49.5 1.10 30.2 0.93 28.1 0.98 32.8 0.93
Price increase similar to current rate 17.9 0.81 17.4 0.78 13.6 0.69 14.9 0.78 14.4 0.69
Price increase less than current rate 5.0 0.44 4.2 0.39 4.8 0.45 3.9 0.39 4.6 0.43
No changes in prices 23.1 0.98 22.1 0.96 30.3 0.93 29.9 1.03 29.1 0.91
Decline in prices 8.7 0.59 6.9 0.52 21.1 0.83 23.2 0.95 19.1 0.78
Cost of Services                    
Prices will increase 63.5 1.04 70.8 0.99 68.3 0.97 70.1 1.06 70.3 0.91
Price increase more than current rate 40.2 1.15 46.2 1.02 43.2 0.99 43.3 1.11 45.5 1.01
Price increase similar to current rate 18.1 0.76 19.3 0.84 19.3 0.79 21.2 0.92 19.1 0.79
Price increase less than current rate 5.3 0.45 5.2 0.44 5.9 0.46 5.6 0.49 5.7 0.47
No changes in prices 31.6 1.00 25.9 0.94 27.4 0.93 25.7 0.99 25.8 0.88
Decline in prices 4.8 0.42 3.3 0.34 4.4 0.42 4.2 0.52 3.9 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 Sep-19 Mar-20 May-20 Jul-20 Sep-20
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 87.0 0.78 89.2 0.65 85.6 0.73 84.6 0.87 84.8 0.73
Price increase more than current rate 57.3 1.29 60.7 1.07 57.1 1.00 55.9 1.12 59.6 1.00
Price increase similar to current rate 25.1 1.07 24.8 1.00 23.8 0.88 24.3 0.93 20.4 0.82
Price increase less than current rate 4.6 0.47 3.7 0.42 4.7 0.43 4.4 0.46 4.7 0.43
No changes in prices 10.6 0.73 9.0 0.62 11.9 0.67 12.9 0.82 12.1 0.67
Decline in prices 2.4 0.31 1.8 0.26 2.5 0.33 2.5 0.35 3.1 0.35
Food Product                    
Prices will increase 83.0 0.86 85.6 0.73 77.3 0.86 75.3 1.00 77.3 0.85
Price increase more than current rate 52.2 1.23 55.6 1.10 46.9 1.01 45.2 1.10 48.3 0.99
Price increase similar to current rate 25.4 0.96 24.3 0.93 24.2 0.88 24.1 0.96 22.5 0.82
Price increase less than current rate 5.4 0.53 5.7 0.49 6.3 0.51 6.0 0.50 6.4 0.51
No changes in prices 11.9 0.76 10.3 0.64 15.7 0.74 17.4 0.88 14.8 0.72
Decline in prices 5.2 0.43 4.1 0.37 6.9 0.52 7.3 0.63 7.9 0.55
Non- Food Product                    
Prices will increase 78.6 0.94 82.3 0.81 73.3 0.92 74.3 1.04 75.7 0.87
Price increase more than current rate 48.1 1.25 53.6 1.08 42.6 0.99 44.0 1.13 47.3 1.00
Price increase similar to current rate 24.4 0.98 23.4 0.92 23.9 0.87 24.3 0.92 22.2 0.83
Price increase less than current rate 6.1 0.52 5.3 0.47 6.8 0.51 6.0 0.50 6.1 0.49
No changes in prices 16.6 0.85 14.2 0.73 20.7 0.84 18.7 0.97 18.2 0.78
Decline in prices 4.8 0.43 3.4 0.36 6.0 0.49 7.0 0.71 6.1 0.49
Household Durables                    
Prices will increase 64.1 1.04 70.8 1.02 59.6 1.03 62.4 1.14 62.3 0.98
Price increase more than current rate 39.0 1.17 46.6 1.09 34.8 0.99 35.6 1.08 38.8 0.98
Price increase similar to current rate 19.4 0.82 19.8 0.86 19.1 0.79 21.1 0.91 18.4 0.77
Price increase less than current rate 5.6 0.49 4.4 0.42 5.7 0.47 5.8 0.51 5.1 0.45
No changes in prices 24.2 0.90 19.7 0.87 28.4 0.93 26.0 1.01 26.5 0.88
Decline in prices 11.8 0.64 9.5 0.59 12.1 0.67 11.6 0.81 11.2 0.64
Cost of Housing                    
Prices will increase 77.3 0.89 79.9 0.90 59.7 1.00 57.4 1.10 63.9 0.95
Price increase more than current rate 51.8 1.15 56.5 1.03 36.9 0.98 34.7 1.10 42.0 0.99
Price increase similar to current rate 20.6 0.85 19.6 0.82 17.3 0.77 18.4 0.88 17.4 0.75
Price increase less than current rate 4.8 0.45 3.8 0.39 5.5 0.46 4.3 0.43 4.6 0.43
No changes in prices 15.5 0.73 14.5 0.78 25.1 0.89 26.1 1.01 23.8 0.85
Decline in prices 7.2 0.53 5.5 0.47 15.2 0.73 16.5 0.83 12.2 0.67
Cost of Services                    
Prices will increase 79.0 0.93 81.4 0.85 74.4 0.91 75.6 1.06 76.8 0.86
Price increase more than current rate 50.0 1.23 53.0 1.09 44.6 0.98 46.1 1.11 48.5 1.01
Price increase similar to current rate 22.7 0.93 23.3 0.90 23.1 0.85 23.7 0.90 22.0 0.83
Price increase less than current rate 6.3 0.51 5.0 0.44 6.7 0.50 5.8 0.50 6.3 0.50
No changes in prices 17.2 0.85 16.0 0.81 22.1 0.87 20.5 0.97 19.6 0.81
Decline in prices 3.8 0.38 2.7 0.30 3.5 0.38 3.9 0.57 3.6 0.37
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: September 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 9.9 0.10 9.8 0.25 10.8 0.10 10.4 0.07 9.9 0.12 10.3 0.08
Gender-wise                        
Male 9.9 0.11 9.6 0.31 10.7 0.11 10.4 0.08 9.8 0.13 10.2 0.10
Female 10.0 0.13 9.8 0.30 10.8 0.13 10.4 0.09 10.0 0.17 10.3 0.11
Category-wise                        
Financial Sector Employees 9.9 0.54 9.4 0.88 10.8 0.52 10.1 0.63 9.3 0.62 9.4 0.61
Other Employees 9.8 0.15 9.4 0.36 10.7 0.15 10.3 0.11 9.8 0.18 10.1 0.19
Self Employed 9.9 0.16 9.9 0.28 10.7 0.16 10.4 0.10 10.0 0.20 10.4 0.14
Homemaker 9.9 0.16 9.5 0.40 10.7 0.16 10.3 0.11 9.9 0.20 10.2 0.14
Retired Persons 10.4 0.35 9.9 0.54 10.9 0.34 10.5 0.29 10.0 0.40 10.3 0.35
Daily Workers 10.0 0.21 9.8 0.40 11.1 0.21 10.7 0.27 10.0 0.26 10.5 0.26
Other category 10.2 0.22 10.1 0.23 11.2 0.22 10.8 0.26 10.3 0.26 10.6 0.26
Age Group-wise                        
Up to 25 years 9.9 0.19 9.5 0.52 10.8 0.19 10.4 0.15 10.2 0.23 10.4 0.16
25 to 30 years 9.5 0.17 9.0 0.37 10.4 0.17 10.1 0.20 9.6 0.22 10.0 0.28
30 to 35 years 9.6 0.17 9.1 0.35 10.6 0.17 10.2 0.15 9.8 0.22 10.2 0.21
35 to 40 years 9.9 0.17 9.7 0.36 10.8 0.17 10.4 0.11 10.2 0.21 10.3 0.15
40 to 45 years 10.0 0.21 10.1 0.21 11.0 0.21 10.6 0.17 10.3 0.26 10.5 0.21
45 to 50 years 10.0 0.23 9.9 0.39 10.8 0.22 10.5 0.13 9.8 0.29 10.2 0.27
50 to 55 years 10.7 0.26 10.3 0.17 11.5 0.24 11.0 0.41 10.5 0.36 10.9 0.41
55 to 60 years 10.5 0.32 10.3 0.31 11.1 0.31 10.8 0.35 9.6 0.38 10.1 0.36
60 years and above 10.4 0.29 10.0 0.40 11.0 0.28 10.6 0.29 9.9 0.35 10.3 0.27
City-wise                        
Ahmedabad 10.1 0.30 10.1 0.32 11.6 0.32 11.3 0.66 10.3 0.41 10.8 0.44
Bengaluru 9.2 0.28 9.5 0.70 10.4 0.28 10.4 0.18 10.0 0.32 10.3 0.22
Bhopal 8.8 0.57 7.7 1.20 9.8 0.61 9.2 1.01 8.6 0.85 9.0 1.49
Bhubaneswar 9.9 0.93 10.2 2.07 10.7 0.91 12.2 2.41 10.0 0.97 11.4 2.98
Chennai 9.5 0.39 9.5 0.79 11.1 0.34 10.7 0.37 10.7 0.45 11.3 0.83
Delhi 9.0 0.22 8.3 0.34 9.7 0.23 9.3 0.40 9.0 0.26 9.0 0.45
Guwahati 11.7 0.85 11.6 2.54 12.3 0.82 13.4 2.12 10.7 1.02 11.7 1.85
Hyderabad 11.8 0.40 13.4 1.91 12.7 0.38 15.7 0.56 11.2 0.48 15.2 1.03
Jaipur 9.5 0.55 9.6 0.98 10.2 0.58 10.1 0.69 9.5 0.76 9.8 1.09
Kolkata 11.8 0.30 11.8 1.54 12.5 0.28 14.5 1.06 11.8 0.34 13.8 1.50
Lucknow 10.0 0.60 10.0 0.66 10.9 0.56 10.8 0.75 10.0 0.61 10.4 0.69
Mumbai 9.9 0.24 8.8 0.23 10.4 0.25 9.6 0.39 8.6 0.30 8.6 0.34
Nagpur 9.8 0.51 8.8 0.61 11.2 0.45 10.6 0.65 11.1 0.54 10.9 0.71
Patna 8.1 0.54 7.1 0.74 8.8 0.62 8.3 0.69 7.1 0.74 6.8 1.24
Thiruvananthapuram 6.5 0.59 5.2 0.53 7.9 0.65 6.7 0.82 8.9 0.82 8.0 0.78
Chandigarh 10.1 0.61 10.4 0.53 10.4 0.69 10.8 0.66 10.2 0.73 11.2 1.15
Ranchi 7.6 0.35 7.3 0.42 8.6 0.49 8.3 0.57 7.6 0.65 8.1 0.96
Raipur 8.4 0.58 7.7 0.76 9.3 0.66 8.4 0.71 8.6 0.84 9.1 0.88
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
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
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
Sep-20 9.9 0.10 9.8 0.25 10.8 0.10 10.4 0.07 9.9 0.12 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
Sep-19 62.7 62.1 50.2 56.8 61.2
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
Sep-20 62.1 61.0 50.4 45.9 60.5
One Year Ahead
Sep-19 70.7 67.5 56.8 65.5 70.0
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
Sep-20 63.0 64.8 55.5 53.6 66.6
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 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 23 1 4 3 1 7 1 0 1 0 0 0 0 0 0 0 0 0 41
1-<2 0 27 12 5 2 1 1 0 0 0 0 0 0 0 0 0 0 0 48
2-<3 3 5 70 47 30 17 3 1 2 0 0 0 0 0 0 0 0 0 178
3-<4 1 2 15 100 34 65 18 1 0 1 1 0 0 0 0 2 0 1 241
4-<5 1 0 4 4 104 53 37 10 3 0 5 0 0 0 0 0 1 0 222
5-<6 1 4 13 14 15 376 77 147 76 14 98 1 2 2 0 10 0 0 850
6-<7 0 0 1 5 6 5 132 54 54 11 14 1 8 0 0 0 2 1 294
7-<8 0 1 0 1 1 9 6 174 72 55 50 9 5 0 2 6 1 0 392
8-<9 0 0 1 0 0 6 9 7 220 58 104 10 23 3 0 4 9 0 454
9-<10 0 0 0 0 0 3 1 3 4 76 30 25 22 4 4 9 3 0 184
10-<11 0 0 1 1 3 28 6 7 9 2 435 48 135 46 8 228 88 2 1047
11-<12 0 0 0 0 0 0 0 0 0 0 0 16 3 9 0 2 3 1 34
12-<13 0 0 0 0 0 0 0 1 2 1 1 1 34 7 11 19 2 0 79
13-<14 0 0 0 0 0 0 0 0 0 0 1 0 0 12 5 4 9 1 32
14-<15 0 0 0 0 0 0 0 1 0 0 0 0 0 0 10 2 8 1 22
15-<16 0 0 0 1 1 3 0 0 1 0 8 0 1 1 1 99 139 0 255
>=16 0 0 1 1 1 9 0 0 2 0 25 0 3 0 0 30 1194 13 1279
Total 29 40 122 182 198 582 291 406 446 218 772 111 236 84 41 415 1459 20 5652
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 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 20 1 3 2 2 7 1 0 1 0 3 0 0 0 0 1 0 0 41
1-<2 13 10 10 5 2 7 1 0 0 0 0 0 0 0 0 0 0 0 48
2-<3 30 5 35 44 25 25 3 6 3 1 1 0 0 0 0 0 0 0 178
3-<4 38 1 6 48 34 48 24 15 13 2 6 0 3 0 0 1 2 0 241
4-<5 37 1 3 3 58 36 41 19 9 2 7 3 1 0 0 1 1 0 222
5-<6 107 0 3 7 9 243 38 127 80 18 160 4 9 2 1 32 10 0 850
6-<7 46 1 0 0 2 6 76 34 53 25 29 2 9 1 0 8 2 0 294
7-<8 57 1 0 0 2 2 2 95 65 62 57 18 10 2 4 9 4 2 392
8-<9 73 0 0 1 0 1 3 8 121 62 99 13 37 3 4 17 12 0 454
9-<10 28 0 0 0 0 0 1 3 3 36 32 23 15 10 5 16 12 0 184
10-<11 136 0 0 1 0 16 3 5 13 4 252 32 97 40 15 231 200 2 1047
11-<12 1 0 0 0 0 0 0 0 0 1 0 12 7 3 3 3 4 0 34
12-<13 7 0 0 0 0 0 0 0 4 0 3 2 18 8 5 21 11 0 79
13-<14 5 0 0 0 0 0 0 0 0 0 1 0 1 6 2 6 10 1 32
14-<15 3 0 0 0 0 0 0 0 0 1 1 0 0 0 5 1 11 0 22
15-<16 31 0 0 1 0 1 0 0 0 1 4 0 1 1 2 52 161 0 255
>=16 190 0 0 0 0 7 0 0 0 0 18 0 0 0 0 19 1034 11 1279
Total 822 20 60 112 134 399 193 312 365 215 673 109 208 76 46 418 1474 16 5652
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.

2 Unit-level data for previous rounds of the survey are available on the Database on Indian Economy (DBIE) portal of the Bank (weblink: https://dbie.rbi.org.in/DBIE/dbie.rbi?site=unitLevelData).

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