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Date : Jun 06, 2019
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the May 2019 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 5,714 urban households.

Highlights:

i. While three months ahead median inflation expectations of households declined by 20 basis points (bps), one year ahead median inflation expectations remained unchanged from the March 2019 round (Chart 1a, 1b, Table 2); median inflation expectations three months ahead and one year ahead have been on a declining trajectory since the September 2018 round.

ii. The median perception of current inflation dropped by 30 bps and consequently, the gap between households’ current perceptions and future expectations widened in this round for both time horizons referred to earlier.

iii. An increased proportion of households expect a higher rate of price rise across various product groups for both three months ahead and one year ahead (Table 1a, 1b).

Chart1

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 May-18 Nov-18 Dec-18 Mar-19 May-19
General   Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 82.3 77.9 0.91 72.9 1.04 74.8 1.02 78.3 1.01
Price increase more than current rate 50.5 47.4 1.12 46.2 1.14 44.1 1.08 50.0 1.22
Price increase similar to current rate 25.1 25.6 1.00 23.3 0.96 26.9 0.97 25.6 1.01
Price increase less than current rate 6.7 4.9 0.59 3.4 0.39 3.8 0.41 2.8 0.32
No changes in prices 16.0 19.2 0.87 21.2 0.98 21.9 0.98 18.4 0.96
Decline in prices 1.7 2.9 0.33 5.8 0.46 3.4 0.36 3.3 0.35
Food Product                  
Prices will increase 82.0 77.2 0.89 70.7 0.98 73.7 0.96 78.5 0.87
Price increase more than current rate 48.3 46.4 1.03 42.7 1.08 43.6 1.06 48.5 1.13
Price increase similar to current rate 24.5 23.6 0.91 22.4 0.87 24.1 0.88 24.7 0.94
Price increase less than current rate 9.3 7.3 0.63 5.7 0.48 6.0 0.49 5.4 0.46
No changes in prices 13.5 16.9 0.81 17.2 0.79 17.5 0.84 15.0 0.77
Decline in prices 4.5 5.9 0.46 12.0 0.65 8.8 0.56 6.5 0.47
Non- Food Product                  
Prices will increase 78.4 75.8 0.90 67.6 1.00 71.3 0.94 75.8 0.91
Price increase more than current rate 45.8 45.2 1.07 40.8 1.08 41.0 1.02 45.2 1.15
Price increase similar to current rate 24.0 24.1 0.94 21.6 0.89 24.5 0.86 25.3 0.91
Price increase less than current rate 8.6 6.5 0.61 5.3 0.47 5.7 0.48 5.4 0.44
No changes in prices 18.1 18.5 0.79 20.5 0.85 21.9 0.87 18.1 0.81
Decline in prices 3.6 5.8 0.48 11.9 0.63 6.8 0.47 6.0 0.47
Household Durables                  
Prices will increase 63.2 57.9 1.06 56.8 1.08 59.5 1.05 61.3 1.12
Price increase more than current rate 36.7 33.8 1.03 34.8 1.08 35.2 0.99 37.0 1.12
Price increase similar to current rate 19.9 18.9 0.80 17.9 0.85 19.3 0.79 19.9 0.85
Price increase less than current rate 6.6 5.2 0.50 4.1 0.39 5.0 0.41 4.3 0.41
No changes in prices 26.8 29.7 0.98 24.8 0.91 27.7 0.96 27.2 1.01
Decline in prices 10.0 12.4 0.66 18.4 0.77 12.8 0.62 11.5 0.64
Cost of Housing                  
Prices will increase 71.6 68.7 0.96 69.1 1.03 68.1 0.98 70.9 1.06
Price increase more than current rate 47.6 44.5 1.05 46.5 1.06 44.2 0.97 46.9 1.13
Price increase similar to current rate 18.2 19.0 0.83 18.2 0.79 19.5 0.76 19.8 0.83
Price increase less than current rate 5.8 5.2 0.51 4.5 0.41 4.4 0.41 4.2 0.39
No changes in prices 20.8 23.7 0.88 22.2 0.94 22.4 0.88 21.7 0.96
Decline in prices 7.7 7.6 0.54 8.6 0.57 9.5 0.60 7.3 0.52
Cost of Services                  
Prices will increase 72.0 68.2 0.99 65.7 1.10 66.4 1.02 68.6 1.03
Price increase more than current rate 42.9 40.4 1.06 40.2 1.11 39.2 1.00 42.6 1.14
Price increase similar to current rate 22.6 22.4 0.86 21.2 0.82 21.9 0.84 21.7 0.89
Price increase less than current rate 6.6 5.3 0.48 4.3 0.41 5.3 0.45 4.3 0.41
No changes in prices 25.6 28.8 0.97 28.2 1.02 28.9 0.99 27.7 0.99
Decline in prices 2.4 3.0 0.35 6.1 0.45 4.7 0.42 3.8 0.37
1. The table provides estimates and standard errors for qualitative responses from the November 2018 round onwards. 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)
Survey period ended May-18 Nov-18 Dec-18 Mar-19 May-19
General   Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 91.1 89.7 0.65 83.8 0.82 84.4 0.90 86.3 0.77
Price increase more than current rate 62.6 60.0 1.11 57.5 1.15 54.6 1.08 58.5 1.19
Price increase similar to current rate 23.4 26.4 0.97 23.3 1.00 26.6 0.93 24.9 1.03
Price increase less than current rate 5.0 3.4 0.43 3.0 0.37 3.2 0.38 3.0 0.32
No changes in prices 6.5 7.6 0.57 11.3 0.73 12.6 0.83 10.2 0.70
Decline in prices 2.4 2.7 0.33 4.9 0.43 3.0 0.33 3.5 0.37
Food Product                  
Prices will increase 85.6 85.4 0.73 80.0 0.82 80.1 0.87 83.1 0.76
Price increase more than current rate 53.4 52.3 1.14 50.6 1.08 47.2 1.06 50.4 1.19
Price increase similar to current rate 25.2 27.5 0.96 24.7 0.93 28.0 0.88 27.6 0.97
Price increase less than current rate 7.0 5.7 0.51 4.7 0.43 5.0 0.44 5.1 0.43
No changes in prices 9.4 9.4 0.60 12.1 0.68 14.0 0.76 11.4 0.64
Decline in prices 5.0 5.2 0.45 7.9 0.52 5.9 0.45 5.5 0.43
Non- Food Product                  
Prices will increase 82.7 82.4 0.78 76.4 0.92 78.2 0.89 81.3 0.81
Price increase more than current rate 51.1 51.6 1.10 47.5 1.09 45.7 1.05 49.7 1.18
Price increase similar to current rate 25.3 25.2 0.90 24.2 0.92 27.5 0.89 26.8 0.99
Price increase less than current rate 6.3 5.6 0.50 4.7 0.43 5.0 0.41 4.9 0.44
No changes in prices 13.2 12.7 0.68 15.8 0.78 16.9 0.80 13.7 0.72
Decline in prices 4.1 4.9 0.43 7.7 0.54 5.0 0.41 5.0 0.43
Household Durables                  
Prices will increase 72.5 70.1 0.98 66.9 1.02 68.3 0.99 68.8 1.04
Price increase more than current rate 45.2 43.0 1.10 42.0 1.09 41.3 1.02 42.9 1.14
Price increase similar to current rate 21.5 22.0 0.88 20.4 0.84 22.6 0.81 21.9 0.88
Price increase less than current rate 5.8 5.1 0.47 4.5 0.40 4.4 0.41 4.0 0.40
No changes in prices 19.2 20.4 0.85 20.1 0.91 21.9 0.89 21.5 0.91
Decline in prices 8.3 9.6 0.61 13.0 0.69 9.8 0.57 9.7 0.59
Cost of Housing                  
Prices will increase 79.8 80.6 0.79 79.6 0.85 77.6 0.86 79.8 0.84
Price increase more than current rate 55.2 53.8 1.04 55.9 1.00 51.0 1.01 54.3 1.05
Price increase similar to current rate 19.6 22.5 0.91 19.8 0.78 22.9 0.77 21.9 0.84
Price increase less than current rate 5.0 4.3 0.44 3.9 0.39 3.8 0.36 3.6 0.37
No changes in prices 13.9 13.3 0.68 13.7 0.74 15.2 0.75 14.3 0.77
Decline in prices 6.3 6.1 0.50 6.7 0.50 7.2 0.53 5.9 0.45
Cost of Services                  
Prices will increase 84.2 83.3 0.75 77.9 0.88 78.8 0.87 80.9 0.83
Price increase more than current rate 52.9 52.2 1.11 49.0 1.11 47.5 1.02 50.3 1.12
Price increase similar to current rate 24.4 25.7 0.92 24.1 0.90 26.4 0.87 25.3 0.94
Price increase less than current rate 6.9 5.4 0.48 4.8 0.44 4.8 0.42 5.3 0.49
No changes in prices 13.5 13.5 0.68 17.1 0.82 17.4 0.81 15.5 0.77
Decline in prices 2.4 3.1 0.34 5.0 0.44 3.9 0.37 3.6 0.36
1. The table provides estimates and standard errors for qualitative responses from the November 2018 round onwards. 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 2: Inflation Expectations of Various Groups: May 2019
  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 7.8 0.10 6.6 0.15 8.6 0.10 7.6 0.12 8.4 0.12 8.1 0.16
Gender-wise                        
Male 7.8 0.13 6.6 0.16 8.5 0.13 7.5 0.16 8.3 0.16 7.8 0.20
Female 8.0 0.15 6.6 0.23 8.8 0.15 7.8 0.17 8.7 0.17 8.4 0.21
Category-wise                        
Financial Sector Employees 7.2 0.40 6.2 0.27 7.8 0.45 6.9 0.34 7.7 0.67 7.0 0.49
Other Employees 7.7 0.18 6.7 0.29 8.5 0.19 7.6 0.26 8.1 0.22 7.7 0.28
Self Employed 7.8 0.19 6.9 0.26 8.5 0.19 7.6 0.23 8.2 0.23 7.7 0.28
Homemaker 7.9 0.18 6.5 0.25 8.7 0.17 7.8 0.19 8.7 0.20 8.4 0.23
Retired Persons 8.3 0.33 7.3 0.55 9.2 0.34 8.8 0.69 8.9 0.40 8.9 0.84
Daily Workers 8.0 0.23 6.7 0.29 8.8 0.24 7.9 0.34 8.7 0.28 8.6 0.36
Other category 7.0 0.20 6.1 0.22 7.8 0.22 6.8 0.29 7.8 0.27 7.5 0.34
Age Group-wise                        
Up to 25 years 7.2 0.17 6.1 0.18 8.1 0.18 7.2 0.19 8.1 0.21 7.8 0.25
25 to 30 years 7.7 0.17 6.6 0.27 8.5 0.18 7.6 0.20 8.3 0.21 8.0 0.25
30 to 35 years 7.9 0.20 6.9 0.30 8.7 0.21 7.7 0.23 8.7 0.25 8.4 0.38
35 to 40 years 7.7 0.18 6.6 0.32 8.6 0.19 7.8 0.22 8.4 0.24 8.2 0.29
40 to 45 years 8.3 0.24 7.0 0.41 9.0 0.24 7.7 0.32 8.6 0.29 8.4 0.30
45 to 50 years 8.2 0.25 6.8 0.38 9.1 0.25 8.1 0.34 8.7 0.28 8.4 0.32
50 to 55 years 8.0 0.28 6.6 0.38 8.7 0.28 7.8 0.40 8.3 0.37 7.9 0.47
55 to 60 years 8.6 0.31 7.7 0.45 9.5 0.33 8.6 0.64 8.8 0.36 8.5 0.68
60 years and above 8.0 0.29 6.8 0.43 8.8 0.30 8.2 0.47 8.5 0.34 8.1 0.46
City-wise                        
Ahmedabad 7.2 0.33 6.4 0.43 8.2 0.29 7.6 0.32 7.5 0.37 7.5 0.34
Bengaluru 6.5 0.36 5.3 0.24 7.6 0.32 6.3 0.33 8.5 0.28 7.9 0.50
Bhopal 8.6 0.50 7.8 0.89 9.5 0.67 8.9 0.97 8.3 0.69 8.5 1.27
Bhubaneswar 5.6 0.66 5.1 0.37 6.7 0.77 6.1 0.52 7.9 0.73 7.5 0.61
Chennai 8.7 0.34 8.5 0.51 10.0 0.43 10.0 0.58 11.0 0.49 11.4 0.89
Delhi 7.0 0.20 5.9 0.15 7.5 0.22 6.6 0.29 7.0 0.27 6.6 0.40
Guwahati 5.8 0.52 5.2 0.38 5.7 0.50 5.1 0.52 5.6 0.59 5.2 0.53
Hyderabad 8.4 0.39 6.7 0.48 9.7 0.42 8.4 0.62 10.4 0.49 10.2 0.76
Jaipur 5.9 0.25 5.7 0.14 6.5 0.27 6.2 0.38 5.9 0.43 6.0 0.44
Kolkata 10.4 0.46 10.0 0.51 11.1 0.45 10.9 0.72 10.9 0.49 11.2 0.99
Lucknow 8.5 0.41 8.5 0.49 9.7 0.45 9.5 0.60 9.9 0.69 10.3 0.48
Mumbai 8.4 0.25 7.6 0.31 9.2 0.27 8.7 0.52 8.1 0.37 8.1 0.54
Nagpur 6.5 0.36 5.3 0.26 6.6 0.39 5.5 0.37 5.5 0.68 4.8 1.44
Patna 6.3 0.31 5.8 0.20 6.6 0.34 5.9 0.35 6.8 0.40 6.6 0.67
Thiruvananthapuram 6.0 0.61 5.3 0.35 7.4 0.65 6.8 0.71 9.5 0.86 9.1 1.02
Chandigarh 7.8 0.66 7.3 1.07 7.4 0.65 6.8 0.81 7.3 0.73 7.3 0.76
Ranchi 6.9 0.20 6.8 0.19 7.3 0.33 7.4 0.23 6.8 0.51 7.6 0.23
Raipur 7.9 0.48 6.9 1.08 6.8 0.62 6.1 0.79 5.0 0.96 3.2 1.95
Note: The table provides estimates and standard errors for quantitative responses for the May 2019 round.

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-18 8.7 -- 7.9 -- 9.4 -- 8.7 -- 9.7 -- 9.9 --
Nov-18 9.1 0.11 8.2 0.18 9.7 0.12 9.0 0.22 9.6 0.12 9.8 0.25
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
Mar-19 8.0 0.09 6.9 0.14 8.7 0.10 7.8 0.12 8.3 0.12 8.1 0.17
May-19 7.8 0.10 6.6 0.15 8.6 0.10 7.6 0.12 8.4 0.12 8.1 0.16
‘--‘ Calculation of Standard Error was initiated from the September 2018 round onwards.
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
May-18 67.5 65.6 56.6 60.0 65.0
Nov-18 65.6 66.8 56.5 61.4 66.2
Dec-18 62.9 64.0 55.3 62.4 64.3
Mar-19 62.6 62.3 54.9 58.8 63.4
May-19 66.4 65.4 56.8 62.0 66.2
One Year Ahead
Mar-18 72.4 70.8 62.5 67.4 72.1
Nov-18 73.5 72.3 62.7 67.7 73.2
Dec-18 72.5 71.7 62.5 70.3 72.9
Mar-19 70.2 68.8 61.8 66.0 69.9
May-19 71.6 71.3 62.7 70.7 72.5
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 2019
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 24 5 4 2 2 3 0 0 0 0 1 0 0 0 0 0 1 0 42
1-<2 4 38 15 8 1 4 0 0 0 0 0 0 0 0 0 0 0 0 70
2-<3 10 9 129 68 47 27 1 0 0 0 1 0 0 0 0 0 0 0 292
3-<4 0 1 24 178 118 94 16 3 0 0 3 0 0 0 0 0 0 0 437
4-<5 1 5 9 20 255 109 87 22 10 0 4 0 0 0 0 0 0 0 522
5-<6 6 7 12 28 31 579 190 210 71 13 66 0 1 0 0 10 0 1 1225
6-<7 4 0 0 5 8 13 210 123 65 15 16 0 4 0 0 0 0 0 463
7-<8 0 1 1 1 7 11 4 198 130 60 43 3 6 0 1 0 0 1 467
8-<9 0 0 0 3 2 7 6 6 141 65 111 9 10 3 1 1 1 0 366
9-<10 1 0 0 2 0 2 2 0 1 84 39 22 10 1 2 3 1 1 171
10-<11 1 0 4 1 0 22 0 7 18 4 347 51 137 37 8 107 41 0 785
11-<12 0 0 1 0 0 1 1 0 0 0 2 23 13 10 2 7 5 0 65
12-<13 0 0 0 0 0 0 0 0 1 1 1 1 23 6 21 25 5 0 84
13-<14 0 0 0 0 0 0 0 0 0 0 0 0 0 6 3 8 3 0 20
14-<15 0 0 0 0 0 0 0 0 0 0 1 0 0 1 8 6 12 0 28
15-<16 0 0 0 0 0 1 0 2 0 0 6 0 3 2 0 54 72 0 140
>=16 2 0 0 0 0 2 0 0 0 1 6 0 2 0 1 12 508 3 537
Total 53 66 199 316 471 875 517 571 437 243 647 109 209 66 47 233 649 6 5714
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 2019
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 22 3 4 3 1 5 1 0 0 0 1 0 0 0 0 0 2 0 42
1-<2 18 18 15 6 2 3 0 3 1 0 1 0 0 0 0 1 0 2 70
2-<3 58 3 65 39 60 44 9 8 0 1 1 0 1 0 0 2 0 1 292
3-<4 70 1 1 102 48 102 55 29 13 3 9 0 1 1 0 1 0 1 437
4-<5 96 1 3 5 134 77 80 47 39 11 21 3 2 0 1 2 0 0 522
5-<6 168 2 4 5 16 346 109 167 149 42 161 8 9 1 1 18 18 1 1225
6-<7 62 0 0 1 4 4 125 89 74 40 41 7 6 0 1 8 1 0 463
7-<8 64 1 0 1 1 2 5 117 88 81 67 8 16 1 5 8 2 0 467
8-<9 49 0 0 0 1 5 0 5 87 31 114 23 21 12 0 12 6 0 366
9-<10 21 0 0 0 0 2 1 1 1 58 21 28 20 5 5 4 4 0 171
10-<11 76 0 0 0 0 5 3 10 7 2 227 26 94 34 26 154 120 1 785
11-<12 5 0 0 0 0 1 0 0 1 0 2 17 6 14 4 8 7 0 65
12-<13 7 0 0 0 0 0 0 0 0 0 0 0 20 6 8 24 18 1 84
13-<14 0 0 0 0 0 0 0 0 0 0 0 0 0 5 3 6 6 0 20
14-<15 1 0 0 0 0 0 0 0 0 0 1 0 1 0 6 3 16 0 28
15-<16 18 0 0 0 0 0 0 1 0 1 3 0 2 1 0 37 77 0 140
>=16 59 1 0 0 0 0 0 0 1 0 3 0 0 0 1 7 461 4 537
Total 794 30 92 162 267 596 388 477 461 270 673 120 199 80 61 295 738 11 5714
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.


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