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Date : Jun 08, 2022
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the May 2022 round of the Inflation Expectations Survey of Households (IESH)1 2. The survey was conducted during May 2 to 11, 2022 in 19 major cities. The results are based on responses from 6,062 urban households.

In view of the cut in the prices of petrol and diesel on May 21, 2022, a limited follow-up survey (hereinafter called the ‘extension survey’) was conducted during May 24-28, 2022, which covered around half of the households who had responded in the regular survey round. In all, 3,036 households gave their revised expectations of inflation (quantitative) in the extension survey.

Highlights:

A. Regular survey round

  1. Households’ median inflation perception for the current period increased by 40 basis points (bps) when compared to March 2022 round of the survey, whereas it increased by 10 bps and 30 bps for three months and one year ahead periods, respectively [Charts 1a and 1b; Table 3].

  2. Majority of the households expect general prices and inflation to remain high over three months and one year ahead horizons [Table 1a and 1b].

  3. Expectations for overall price and inflation over next one year were in sync with those for non-food products and cost of services, while three months ahead expectations were generally more aligned to those for food products and non-food commodities [Table 4].

Chart 1a. Median Inflation Rate -Perception and Three Months ahead Expectation And Chart 1b. Median Inflation Rate -Perception and One Year ahead Expectation

Note: Please see the excel file for time series data3.

B. Extension survey

In the extension survey round, inflation expectations for three months and one year ahead declined by 190 bps and 90 bps, respectively, when compared with the regular round (Table A below).

Table A: Median Inflation expectations: Regular vs. Extension round
(in per cent)
Sr. No. Round Description No. of Respondents 3M Ahead Expectation 1Y Ahead Expectation
1 Regular survey round
(May 2-11, 2022)
6,062 10.8 11.1
2 Common Respondents
(Regular and Extension rounds)
3,036 10.8 11.0
3 Extension Round
(May 24-28, 2022)
8.9 10.1

Table 1(a): Product-wise Expectations of Prices for Three Months ahead
(Percentage of Respondents)
Survey period ended May-21 Nov-21 Jan-22 Mar-22 May-22
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 83.7 0.68 89.3 0.64 85.6 0.68 89.9 0.64 88.5 0.69
Price increase more than current rate 58.3 0.91 66.9 1.16 61.4 1.07 67.2 1.27 66.1 1.10
Price increase similar to current rate 21.3 0.76 19.2 0.94 20.5 0.87 19.3 0.96 18.9 0.83
Price increase less than current rate 4.0 0.37 3.3 0.41 3.7 0.40 3.5 0.45 3.5 0.37
No changes in prices 14.0 0.63 8.2 0.55 12.0 0.64 8.6 0.59 9.1 0.62
Decline in prices 2.3 0.30 2.5 0.30 2.4 0.30 1.5 0.22 2.3 0.32
Food Product                    
Prices will increase 84.4 0.71 86.0 0.70 83.7 0.71 89.6 0.62 88.4 0.66
Price increase more than current rate 60.0 0.92 63.6 1.16 61.0 1.01 68.2 1.14 65.6 1.04
Price increase similar to current rate 19.6 0.74 17.2 0.82 17.0 0.78 16.2 0.88 17.4 0.78
Price increase less than current rate 4.8 0.38 5.2 0.46 5.7 0.47 5.2 0.48 5.4 0.44
No changes in prices 11.7 0.62 8.2 0.51 10.5 0.58 6.9 0.51 7.1 0.51
Decline in prices 3.9 0.38 5.9 0.46 5.8 0.45 3.5 0.36 4.5 0.43
Non- Food Product                    
Prices will increase 78.6 0.78 86.3 0.67 80.4 0.73 88.4 0.63 87.5 0.70
Price increase more than current rate 53.0 0.94 62.5 1.17 55.4 1.02 65.6 1.17 64.5 1.05
Price increase similar to current rate 20.0 0.75 18.8 0.85 19.4 0.80 17.6 0.87 17.9 0.79
Price increase less than current rate 5.6 0.44 4.9 0.48 5.6 0.46 5.2 0.49 5.1 0.44
No changes in prices 17.1 0.71 8.9 0.54 14.1 0.64 8.7 0.56 8.2 0.54
Decline in prices 4.3 0.42 4.8 0.43 5.4 0.43 2.9 0.31 4.2 0.43
Household Durables                    
Prices will increase 58.8 0.96 68.6 0.90 69.9 0.88 73.5 0.89 74.7 0.93
Price increase more than current rate 37.6 0.93 47.7 1.11 48.6 1.03 51.9 1.20 53.4 1.13
Price increase similar to current rate 16.5 0.70 16.0 0.77 16.2 0.70 16.0 0.83 16.3 0.78
Price increase less than current rate 4.6 0.40 4.9 0.44 5.1 0.45 5.5 0.50 5.1 0.42
No changes in prices 32.3 0.90 22.7 0.82 23.1 0.82 20.4 0.83 19.7 0.82
Decline in prices 9.0 0.56 8.7 0.54 7.0 0.45 6.1 0.44 5.5 0.44
Cost of Housing                    
Prices will increase 54.9 0.94 74.3 0.94 71.5 0.88 75.8 0.94 78.5 0.90
Price increase more than current rate 36.4 0.92 55.1 1.16 51.3 1.07 54.9 1.23 59.4 1.11
Price increase similar to current rate 14.6 0.67 15.6 0.78 16.1 0.74 16.6 0.80 15.4 0.73
Price increase less than current rate 3.9 0.36 3.7 0.39 4.2 0.42 4.3 0.40 3.7 0.35
No changes in prices 30.6 0.88 19.0 0.82 21.3 0.80 18.9 0.86 17.1 0.82
Decline in prices 14.6 0.68 6.7 0.50 7.2 0.48 5.4 0.46 4.3 0.40
Cost of Services                    
Prices will increase 67.7 0.89 76.5 0.86 74.3 0.83 76.3 0.88 78.5 0.88
Price increase more than current rate 44.5 0.93 53.9 1.19 51.6 1.05 54.5 1.19 56.4 1.09
Price increase similar to current rate 18.2 0.71 17.6 0.80 18.0 0.79 16.8 0.80 17.4 0.71
Price increase less than current rate 4.9 0.40 5.0 0.49 4.6 0.43 5.0 0.47 4.8 0.42
No changes in prices 29.2 0.86 20.2 0.80 22.3 0.78 21.2 0.86 18.6 0.82
Decline in prices 3.2 0.35 3.3 0.34 3.4 0.34 2.4 0.29 2.8 0.32
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 May-21 Nov-21 Jan-22 Mar-22 May-22
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 86.9 0.65 90.4 0.59 89.6 0.58 91.5 0.58 91.3 0.60
Price increase more than current rate 62.3 0.91 70.5 1.15 68.2 1.05 71.0 1.19 70.8 1.07
Price increase similar to current rate 20.3 0.75 16.7 0.91 18.1 0.81 17.4 0.93 17.3 0.82
Price increase less than current rate 4.2 0.38 3.3 0.39 3.3 0.39 3.1 0.41 3.1 0.36
No changes in prices 10.4 0.58 6.4 0.46 7.8 0.50 6.1 0.48 5.8 0.47
Decline in prices 2.7 0.33 3.1 0.35 2.6 0.29 2.4 0.29 2.8 0.36
Food Product                    
Prices will increase 81.7 0.75 84.5 0.74 83.8 0.71 85.3 0.72 86.7 0.72
Price increase more than current rate 53.4 0.95 60.2 1.20 58.2 1.06 60.9 1.19 62.8 1.10
Price increase similar to current rate 22.7 0.76 19.9 0.92 20.4 0.86 19.6 0.91 19.2 0.82
Price increase less than current rate 5.5 0.43 4.4 0.42 5.2 0.45 4.8 0.47 4.7 0.41
No changes in prices 12.5 0.64 9.4 0.57 10.9 0.61 9.8 0.59 8.1 0.52
Decline in prices 5.8 0.46 6.1 0.47 5.3 0.40 5.0 0.41 5.2 0.48
Non- Food Product                    
Prices will increase 79.2 0.78 85.1 0.72 82.9 0.72 85.8 0.73 87.0 0.72
Price increase more than current rate 51.6 0.95 61.7 1.20 57.5 1.09 62.4 1.18 63.7 1.09
Price increase similar to current rate 21.9 0.75 19.0 0.87 20.5 0.86 18.9 0.89 19.1 0.82
Price increase less than current rate 5.6 0.44 4.4 0.45 4.9 0.44 4.5 0.44 4.3 0.40
No changes in prices 15.8 0.69 9.5 0.56 12.0 0.61 9.7 0.60 8.2 0.54
Decline in prices 5.0 0.44 5.4 0.43 5.0 0.41 4.5 0.40 4.7 0.47
Household Durables                    
Prices will increase 64.8 0.94 75.0 0.87 75.4 0.87 77.3 0.84 78.7 0.84
Price increase more than current rate 41.1 0.94 52.3 1.16 52.1 1.07 54.1 1.16 56.4 1.09
Price increase similar to current rate 18.7 0.72 18.2 0.85 18.7 0.81 18.3 0.89 17.4 0.75
Price increase less than current rate 4.9 0.39 4.5 0.45 4.6 0.45 4.8 0.48 4.9 0.42
No changes in prices 26.7 0.86 18.0 0.75 18.5 0.77 17.1 0.74 15.9 0.72
Decline in prices 8.5 0.55 7.0 0.48 6.1 0.44 5.6 0.43 5.3 0.46
Cost of Housing                    
Prices will increase 65.4 0.92 82.4 0.77 79.3 0.78 83.1 0.75 85.3 0.72
Price increase more than current rate 43.4 0.96 60.6 1.15 57.0 1.03 61.1 1.17 64.2 1.07
Price increase similar to current rate 17.6 0.71 17.9 0.86 18.1 0.78 17.6 0.88 17.2 0.77
Price increase less than current rate 4.5 0.39 3.9 0.40 4.2 0.43 4.5 0.43 4.0 0.38
No changes in prices 23.4 0.83 12.8 0.67 15.1 0.66 13.2 0.67 10.5 0.60
Decline in prices 11.2 0.62 4.9 0.41 5.6 0.43 3.7 0.36 4.1 0.40
Cost of Services                    
Prices will increase 76.5 0.81 83.6 0.73 82.0 0.75 83.0 0.79 84.9 0.78
Price increase more than current rate 49.9 0.94 59.5 1.20 57.5 1.04 59.2 1.25 62.2 1.10
Price increase similar to current rate 21.4 0.75 19.1 0.88 19.8 0.81 18.8 0.93 17.8 0.78
Price increase less than current rate 5.2 0.42 5.0 0.46 4.6 0.44 5.0 0.47 4.9 0.42
No changes in prices 20.1 0.76 13.3 0.65 15.1 0.68 14.1 0.71 12.0 0.67
Decline in prices 3.4 0.36 3.1 0.34 3.0 0.31 3.0 0.32 3.0 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 2: Inflation Expectations of Various Groups: May-22
  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 10.3 0.11 10.1 0.08 11.4 0.11 10.8 0.11 11.1 0.12 11.1 0.27
Gender-wise                        
Male 10.7 0.14 10.3 0.08 11.6 0.14 11.2 0.40 11.4 0.16 11.8 0.49
Female 10.0 0.15 9.9 0.23 11.2 0.15 10.8 0.14 10.9 0.17 10.9 0.25
Category-wise                        
Financial Sector Employees 10.4 0.67 9.8 0.87 11.3 0.75 11.3 1.33 11.2 0.90 11.4 1.64
Other Employees 10.4 0.19 10.2 0.11 11.6 0.18 11.2 0.38 11.5 0.21 12.2 0.47
Self Employed 10.9 0.21 10.4 0.11 11.8 0.20 11.8 0.63 11.5 0.24 12.0 0.72
Homemaker 9.9 0.18 9.8 0.26 11.1 0.17 10.7 0.13 10.9 0.20 10.8 0.20
Retired Persons 10.9 0.42 10.6 0.29 11.5 0.41 12.0 1.10 11.6 0.43 12.8 1.48
Daily Workers 10.6 0.27 10.2 0.17 11.6 0.26 11.3 0.60 11.1 0.33 11.7 0.73
Other category 9.7 0.23 9.0 0.40 10.8 0.23 10.5 0.20 10.6 0.29 10.6 0.29
Age Group-wise                        
Up to 25 years 9.6 0.20 9.1 0.29 10.9 0.19 10.5 0.14 10.8 0.22 10.7 0.22
25 to 30 years 10.0 0.20 10.0 0.21 11.3 0.20 10.8 0.20 11.3 0.23 11.4 0.57
30 to 35 years 10.2 0.22 9.9 0.28 11.3 0.21 10.8 0.26 11.0 0.25 11.0 0.36
35 to 40 years 10.4 0.21 10.2 0.15 11.4 0.20 10.9 0.29 11.0 0.25 11.2 0.46
40 to 45 years 10.2 0.25 9.8 0.44 11.3 0.25 10.8 0.42 10.8 0.29 10.7 0.35
45 to 50 years 10.8 0.24 10.4 0.13 11.8 0.23 11.6 0.79 11.1 0.30 11.5 0.69
50 to 55 years 10.6 0.27 10.3 0.17 11.8 0.26 11.6 0.70 11.4 0.33 12.2 0.87
55 to 60 years 11.3 0.32 10.6 0.16 12.1 0.31 13.2 1.14 11.3 0.40 12.5 1.04
60 years and above 11.1 0.32 10.6 0.32 11.9 0.32 12.9 1.24 11.5 0.36 13.3 1.24
City-wise                        
Ahmedabad 8.6 0.49 6.9 0.62 9.8 0.52 8.1 0.76 10.0 0.51 9.0 0.91
Bengaluru 10.6 0.31 10.5 0.13 11.7 0.32 13.1 1.26 11.6 0.41 14.5 1.02
Bhopal 8.7 1.12 7.7 1.59 9.7 1.04 9.4 1.12 9.3 0.83 9.5 0.97
Bhubaneswar 8.6 0.52 8.4 1.11 10.6 0.58 10.1 1.19 11.1 0.56 10.9 0.88
Chennai 10.9 0.40 10.5 0.20 12.4 0.35 13.3 1.18 12.4 0.35 15.1 0.71
Delhi 10.4 0.24 10.2 0.19 11.6 0.24 11.2 0.63 11.4 0.26 11.4 0.75
Guwahati 6.6 0.31 6.1 0.40 7.3 0.50 6.8 0.60 7.5 0.66 7.4 0.45
Hyderabad 11.4 0.59 10.9 1.10 12.6 0.47 13.7 1.68 11.7 0.57 13.8 1.61
Jaipur 10.8 0.61 10.3 0.49 11.3 0.60 11.1 0.75 11.0 0.63 11.1 0.77
Jammu 11.7 1.11 12.1 2.18 13.1 0.87 14.9 1.45 12.3 0.88 14.6 1.65
Kolkata 10.6 0.33 10.2 0.28 11.8 0.29 11.4 0.74 11.5 0.28 11.6 0.79
Lucknow 11.2 0.74 11.0 1.45 11.6 0.76 12.4 1.86 11.5 0.89 13.1 2.05
Mumbai 10.0 0.23 9.4 0.32 11.1 0.24 10.6 0.25 10.5 0.29 10.7 0.32
Nagpur 10.8 0.70 10.4 0.49 12.3 0.76 13.6 1.72 11.2 1.11 13.5 1.98
Patna 9.8 0.59 9.1 0.80 10.6 0.60 9.8 0.92 10.5 0.64 10.0 0.77
Thiruvananthapuram 7.4 0.55 5.8 0.29 9.1 0.52 8.2 0.69 10.1 0.54 9.7 0.72
Chandigarh 11.3 0.52 10.3 0.87 12.0 0.51 11.7 1.20 11.5 0.60 11.4 1.02
Ranchi 6.8 0.22 6.5 0.28 7.3 0.26 7.0 0.34 7.2 0.36 7.7 0.52
Raipur 7.9 0.46 7.7 0.77 8.6 0.62 8.5 1.18 9.7 1.06 10.5 2.07
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
May-21 10.4 0.09 10.2 0.04 11.3 0.09 10.8 0.07 10.7 0.11 10.8 0.09
Nov-21 10.7 0.11 10.4 0.05 11.9 0.11 12.3 0.27 11.5 0.12 12.7 0.27
Jan-22 9.9 0.10 9.7 0.28 11.1 0.10 10.6 0.08 10.7 0.11 10.7 0.09
Mar-22 9.8 0.12 9.7 0.31 11.1 0.12 10.7 0.09 10.9 0.13 10.8 0.11
May-22 10.3 0.11 10.1 0.08 11.4 0.11 10.8 0.11 11.1 0.12 11.1 0.27
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 Household durables Housing Cost of services
Three Months Ahead
May-21 68.2 65.3 51.8 50.3 60.6
Nov-21 69.8 70.5 59.0 63.4 65.7
Jan-22 66.8 65.8 60.5 61.7 66.0
Mar-22 70.5 70.8 60.2 62.0 65.8
May-22 70.8 71.3 64.0 66.6 69.3
One Year Ahead
May-21 68.2 67.1 57.7 57.1 67.3
Nov-21 73.8 74.8 66.2 70.4 73.2
Jan-22 71.7 72.4 65.2 67.5 72.9
Mar-22 73.1 74.2 67.5 69.4 74.4
May-22 75.6 76.6 69.8 73.4 76.2
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: May-22
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 5 0 1 1 0 1 0 1 0 0 0 0 0 0 0 0 0 0 9
1-<2 0 12 16 5 1 0 0 0 0 0 0 0 0 0 0 0 0 0 34
2-<3 0 8 49 44 22 11 0 1 0 0 2 0 0 0 0 0 0 0 137
3-<4 0 1 12 51 50 47 11 1 3 0 0 0 0 1 0 0 0 0 177
4-<5 0 4 8 4 82 69 45 16 8 2 1 0 1 0 1 0 0 1 242
5-<6 1 4 7 24 23 278 155 189 78 15 130 2 2 1 0 10 2 0 921
6-<7 0 0 1 0 7 8 108 104 70 15 17 3 5 1 2 0 1 0 342
7-<8 0 0 1 3 0 7 2 135 89 46 68 7 3 0 3 4 1 0 369
8-<9 0 0 2 1 1 4 6 4 152 83 134 13 17 7 5 4 4 0 437
9-<10 0 1 0 0 1 2 1 7 6 84 74 51 25 8 3 8 4 0 275
10-<11 0 1 1 2 1 18 2 10 17 5 319 70 176 65 26 262 148 1 1124
11-<12 0 0 0 0 0 0 1 0 0 1 0 26 12 5 1 4 5 0 55
12-<13 0 0 0 0 0 0 0 0 0 0 2 0 41 11 23 24 10 0 111
13-<14 0 0 0 0 0 0 0 1 1 0 0 0 1 7 7 9 6 0 32
14-<15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 13 19 0 40
15-<16 0 0 0 0 0 2 2 1 1 0 6 1 0 2 1 85 233 0 334
>=16 0 1 0 0 0 7 1 1 0 0 24 0 2 1 1 12 1366 7 1423
Total 6 32 98 135 188 454 334 471 425 251 777 173 285 109 81 435 1799 9 6062
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: May-22
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 3 0 1 0 0 4 0 0 0 0 0 1 0 0 0 0 0 0 9
1-<2 8 4 11 5 2 3 1 0 0 0 0 0 0 0 0 0 0 0 34
2-<3 19 5 29 28 30 15 3 3 1 0 4 0 0 0 0 0 0 0 137
3-<4 12 1 5 32 28 47 22 9 9 5 4 0 1 0 0 1 1 0 177
4-<5 25 1 2 1 47 44 51 29 21 6 6 0 4 1 2 0 2 0 242
5-<6 90 0 2 7 16 179 88 163 100 30 167 6 14 7 4 31 15 2 921
6-<7 30 0 0 1 1 4 67 87 71 22 28 8 9 1 2 3 8 0 342
7-<8 30 0 0 0 2 0 2 78 62 64 80 10 13 3 5 12 8 0 369
8-<9 36 0 0 1 2 2 4 1 93 59 145 17 35 7 7 15 13 0 437
9-<10 22 0 0 0 0 1 1 3 6 57 58 44 43 6 10 12 12 0 275
10-<11 83 0 0 1 0 9 3 7 9 5 215 39 119 57 30 261 284 2 1124
11-<12 7 0 0 0 0 0 0 0 0 0 1 14 13 4 2 8 6 0 55
12-<13 10 0 0 0 0 0 0 0 0 0 2 0 23 8 20 20 28 0 111
13-<14 3 0 0 0 0 0 0 0 1 0 0 0 1 1 6 9 11 0 32
14-<15 2 0 0 0 0 0 0 0 0 0 0 0 0 1 4 11 22 0 40
15-<16 29 0 0 0 0 0 0 0 1 0 5 0 1 1 0 57 240 0 334
>=16 122 0 0 0 0 1 0 0 0 0 13 1 2 0 0 10 1270 4 1423
Total 531 11 50 76 128 309 242 380 374 248 728 140 278 97 92 450 1920 8 6062
Note: Figures are based on sample observations

1 The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank. Results of the previous survey round were released on the Bank’s website on April 8, 2022.

2 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. All estimates of inflation expectations are given in the form of medians, unless stated otherwise.

3 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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