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].
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.
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