Households’ Inflation Expectations Survey

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Published on August 06, 2021

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Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the July 2021 round of the Inflation Expectations Survey of Households (IESH)¹. In view of the Covid-19 pandemic, the survey was conducted through field interviews, wherever possible, and telephonic interviews elsewhere, during June 28 to July 9, 2021 in 18 major cities. The results² are based on responses from 5,963 urban households³.

Highlights:

Households’ median inflation perception for the current period remained elevated at 10.3 per cent [Charts 1a and 1b; Table 3].
Median inflation expectations for three months and one year ahead period hardened by 50 basis points and 60 basis points, respectively, in the latest survey round. [Charts 1a and 1b; Table 3].
Over 60 per cent of the respondents expect higher general inflation over the next quarter as well as over the next one year [Tables 1a and 1b].
One year ahead expectations on general prices and inflation were mostly aligned with the respondents’ surmise for the cost of non-food products and services [Table 4].
Households expect higher rise in food prices over three month horizon when compared to that over one year horizon [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-20		Jan-21		Mar-21		May-21		Jul-21
General	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE
Prices will increase	83.5	0.92	83.7	0.89	86.6	0.74	83.7	0.68	85.9	0.79
Price increase more than current rate	52.2	1.14	56.0	1.26	58.4	1.14	58.5	0.91	63.0	1.15
Price increase similar to current rate	26.0	1.03	22.4	0.95	24.1	0.94	21.2	0.76	19.6	0.90
Price increase less than current rate	5.3	0.54	5.3	0.53	4.1	0.50	4.0	0.37	3.3	0.38
No changes in prices	14.0	0.84	14.3	0.86	11.1	0.71	14.0	0.63	11.3	0.70
Decline in prices	2.5	0.43	1.9	0.30	2.3	0.29	2.3	0.30	2.8	0.40
Food Product
Prices will increase	82.3	0.86	80.9	0.95	85.2	0.70	84.4	0.72	84.0	0.81
Price increase more than current rate	54.7	1.08	54.2	1.16	61.2	1.01	60.2	0.92	61.0	1.15
Price increase similar to current rate	21.9	0.89	20.0	0.95	18.1	0.81	19.4	0.75	17.6	0.89
Price increase less than current rate	5.7	0.47	6.7	0.57	6.0	0.55	4.8	0.38	5.4	0.53
No changes in prices	13.2	0.75	13.0	0.82	9.3	0.60	11.8	0.63	10.5	0.65
Decline in prices	4.5	0.56	6.1	0.54	5.5	0.45	3.9	0.39	5.5	0.53
Non- Food Product
Prices will increase	79.1	0.99	79.3	0.98	81.0	0.78	78.6	0.79	82.6	0.85
Price increase more than current rate	48.3	1.11	51.6	1.20	57.0	1.00	53.1	0.95	59.0	1.17
Price increase similar to current rate	24.6	0.98	20.9	0.90	19.4	0.77	19.8	0.75	18.8	0.92
Price increase less than current rate	6.2	0.51	6.7	0.56	4.7	0.43	5.6	0.44	4.7	0.50
No changes in prices	15.2	0.87	16.9	0.91	12.9	0.69	17.1	0.72	12.3	0.73
Decline in prices	5.6	0.59	3.8	0.40	6.2	0.48	4.3	0.42	5.1	0.51
Household Durables
Prices will increase	57.8	1.14	64.3	1.11	68.1	0.92	58.8	0.96	65.6	1.10
Price increase more than current rate	34.7	1.07	42.5	1.15	46.0	0.98	37.7	0.94	45.1	1.19
Price increase similar to current rate	17.6	0.87	16.8	0.77	17.7	0.74	16.4	0.70	16.6	0.86
Price increase less than current rate	5.4	0.48	5.0	0.49	4.4	0.44	4.7	0.40	4.0	0.43
No changes in prices	28.4	1.00	27.2	1.05	24.6	0.84	32.2	0.90	25.3	0.99
Decline in prices	13.8	0.86	8.4	0.58	7.3	0.50	9.0	0.56	9.1	0.66
Cost of Housing
Prices will increase	46.9	1.08	66.1	1.11	68.9	0.93	54.9	0.94	64.7	1.13
Price increase more than current rate	28.1	0.98	45.1	1.20	48.4	1.03	36.5	0.92	45.9	1.21
Price increase similar to current rate	14.9	0.78	16.2	0.79	16.7	0.75	14.4	0.67	14.5	0.79
Price increase less than current rate	3.9	0.39	4.8	0.49	3.8	0.40	3.9	0.36	4.2	0.46
No changes in prices	29.9	1.03	24.6	1.02	22.2	0.86	30.5	0.89	23.7	0.99
Decline in prices	23.2	0.95	9.3	0.66	8.9	0.54	14.6	0.69	11.6	0.74
Cost of Services
Prices will increase	70.1	1.06	68.8	1.06	75.6	0.90	67.6	0.89	74.3	1.02
Price increase more than current rate	43.3	1.11	45.7	1.15	51.6	1.02	44.6	0.94	52.5	1.19
Price increase similar to current rate	21.2	0.92	18.5	0.81	19.4	0.79	18.0	0.71	17.3	0.83
Price increase less than current rate	5.6	0.49	4.6	0.50	4.5	0.44	5.0	0.40	4.5	0.45
No changes in prices	25.7	0.99	27.4	1.02	20.8	0.84	29.2	0.87	22.0	0.95
Decline in prices	4.2	0.52	3.8	0.47	3.6	0.36	3.2	0.35	3.7	0.43
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-20		Jan-21		Mar-21		May-21		Jul-21
General	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE	Estimate	SE
Prices will increase	84.6	0.87	88.0	0.80	88.7	0.61	86.9	0.65	86.8	0.78
Price increase more than current rate	55.9	1.12	62.9	1.23	63.4	1.07	62.4	0.91	65.6	1.18
Price increase similar to current rate	24.3	0.93	21.2	0.95	21.4	0.87	20.3	0.75	18.3	0.93
Price increase less than current rate	4.4	0.46	3.9	0.43	3.8	0.44	4.2	0.38	2.9	0.38
No changes in prices	12.9	0.82	9.6	0.75	8.5	0.54	10.4	0.58	10.1	0.68
Decline in prices	2.5	0.35	2.4	0.33	2.8	0.32	2.7	0.33	3.1	0.41
Food Product
Prices will increase	75.3	1.00	80.5	0.96	81.7	0.74	81.7	0.76	80.8	0.87
Price increase more than current rate	45.2	1.10	53.0	1.21	54.6	1.01	53.5	0.95	55.9	1.18
Price increase similar to current rate	24.1	0.96	22.6	0.96	22.2	0.83	22.6	0.77	20.7	0.98
Price increase less than current rate	6.0	0.50	4.9	0.49	4.9	0.46	5.6	0.43	4.2	0.45
No changes in prices	17.4	0.88	13.4	0.84	12.0	0.61	12.5	0.64	12.6	0.73
Decline in prices	7.3	0.63	6.1	0.55	6.3	0.45	5.8	0.46	6.6	0.54
Non- Food Product
Prices will increase	74.3	1.04	80.4	0.93	79.9	0.79	79.2	0.78	80.3	0.91
Price increase more than current rate	44.0	1.13	52.8	1.22	54.0	1.02	51.8	0.96	56.8	1.21
Price increase similar to current rate	24.3	0.92	22.7	0.93	21.4	0.83	21.8	0.76	19.0	0.91
Price increase less than current rate	6.0	0.50	4.9	0.45	4.6	0.44	5.7	0.44	4.6	0.48
No changes in prices	18.7	0.97	15.0	0.84	13.4	0.66	15.8	0.70	13.4	0.76
Decline in prices	7.0	0.71	4.6	0.46	6.6	0.47	5.0	0.44	6.2	0.57
Household Durables
Prices will increase	62.4	1.14	69.8	1.07	70.3	0.90	64.7	0.94	69.1	1.06
Price increase more than current rate	35.6	1.08	45.0	1.20	47.2	0.98	41.2	0.94	47.0	1.18
Price increase similar to current rate	21.1	0.91	19.9	0.81	18.8	0.74	18.6	0.72	18.3	0.88
Price increase less than current rate	5.8	0.51	4.9	0.48	4.4	0.42	4.9	0.39	3.8	0.41
No changes in prices	26.0	1.01	22.1	0.97	22.7	0.81	26.7	0.86	22.7	0.97
Decline in prices	11.6	0.81	8.1	0.63	6.9	0.48	8.6	0.55	8.2	0.62
Cost of Housing
Prices will increase	57.4	1.10	74.8	1.05	75.7	0.86	65.4	0.93	71.8	1.08
Price increase more than current rate	34.7	1.10	49.9	1.22	53.8	1.04	43.5	0.97	50.9	1.21
Price increase similar to current rate	18.4	0.88	20.2	0.91	18.3	0.79	17.5	0.71	16.6	0.87
Price increase less than current rate	4.3	0.43	4.7	0.48	3.6	0.38	4.5	0.40	4.2	0.44
No changes in prices	26.1	1.01	17.7	0.95	17.8	0.76	23.3	0.83	19.8	0.92
Decline in prices	16.5	0.83	7.5	0.61	6.5	0.48	11.2	0.62	8.4	0.68
Cost of Services
Prices will increase	75.6	1.06	78.5	0.98	81.4	0.75	76.5	0.82	80.9	0.88
Price increase more than current rate	46.1	1.11	51.1	1.21	55.2	1.02	50.0	0.94	55.9	1.17
Price increase similar to current rate	23.7	0.90	22.9	0.96	21.5	0.82	21.3	0.75	20.5	0.91
Price increase less than current rate	5.8	0.50	4.6	0.45	4.7	0.44	5.2	0.43	4.5	0.47
No changes in prices	20.5	0.97	18.2	0.94	15.2	0.67	20.1	0.77	15.7	0.80
Decline in prices	3.9	0.57	3.3	0.41	3.4	0.35	3.4	0.36	3.4	0.42
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: Jul-21
Table 2: Inflation Expectations of Various Groups: Jul-21
	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	10.5	0.11	10.3	0.06	11.7	0.11	11.3	0.42	11.0	0.13	11.5	0.49
Gender-wise
Male	10.8	0.13	10.4	0.07	11.8	0.13	11.9	0.52	11.0	0.16	11.9	0.50
Female	10.2	0.14	10.1	0.11	11.4	0.14	10.8	0.15	10.7	0.18	10.9	0.22
Category-wise
Financial Sector Employees	10.4	0.73	9.3	1.13	11.0	0.64	10.5	1.00	10.5	0.65	10.7	0.44
Other Employees	10.7	0.18	10.3	0.08	11.8	0.17	11.7	0.54	11.2	0.23	12.0	0.61
Self Employed	11.0	0.20	10.5	0.09	12.0	0.19	12.1	0.75	11.0	0.26	12.3	0.69
Homemaker	10.1	0.17	10.1	0.14	11.3	0.16	10.8	0.15	10.6	0.20	10.8	0.21
Retired Persons	11.5	0.39	11.0	1.00	12.3	0.37	13.7	1.34	10.9	0.50	12.9	1.38
Daily Workers	10.3	0.26	10.0	0.31	11.3	0.27	10.8	0.30	10.4	0.33	10.7	0.26
Other category	10.0	0.25	9.5	0.51	11.1	0.24	10.7	0.27	10.7	0.29	10.8	0.31
Age Group-wise
Up to 25 years	9.8	0.19	8.9	0.30	10.8	0.19	10.3	0.15	10.6	0.24	10.7	0.20
25 to 30 years	10.0	0.18	9.9	0.26	11.1	0.19	10.7	0.14	10.7	0.23	10.9	0.29
30 to 35 years	10.5	0.20	10.2	0.14	11.5	0.20	11.2	0.56	11.0	0.23	11.1	0.54
35 to 40 years	10.5	0.19	10.3	0.09	11.6	0.20	11.3	0.45	10.8	0.25	11.0	0.40
40 to 45 years	10.6	0.23	10.3	0.12	11.6	0.22	11.4	0.59	10.9	0.28	11.7	0.76
45 to 50 years	10.7	0.24	10.4	0.09	11.9	0.24	12.0	0.79	11.0	0.31	11.2	0.63
50 to 55 years	11.4	0.26	10.8	0.27	12.3	0.26	13.7	1.22	11.2	0.35	12.7	1.00
55 to 60 years	10.7	0.31	10.4	0.13	11.6	0.30	11.6	0.79	10.1	0.43	10.7	0.41
60 years and above	11.1	0.29	10.6	0.13	12.2	0.29	13.0	0.98	11.1	0.41	12.7	1.36
City-wise
Ahmedabad	10.5	0.44	10.4	0.31	12.4	0.43	13.4	1.24	12.5	0.45	14.2	1.22
Bengaluru	10.2	0.35	10.2	0.27	12.2	0.30	13.2	1.33	12.0	0.41	15.2	0.66
Bhopal	9.8	0.79	9.7	1.15	10.7	0.74	10.7	1.51	8.9	0.76	9.1	1.57
Bhubaneswar	10.1	0.69	10.3	0.53	11.2	0.66	11.2	1.01	9.2	0.90	10.4	2.16
Chennai	9.6	0.40	9.6	0.83	10.9	0.37	10.6	0.29	10.8	0.48	11.9	1.22
Delhi	11.1	0.26	10.4	0.12	12.1	0.25	12.5	0.86	11.3	0.31	11.8	1.02
Guwahati	11.6	0.56	11.1	1.37	11.8	0.54	11.5	1.16	11.9	0.72	12.0	2.08
Hyderabad	10.7	0.46	10.4	0.87	11.8	0.42	12.7	1.97	10.8	0.48	12.3	1.70
Jaipur	11.5	0.59	10.8	0.66	11.4	0.67	11.6	1.51	11.8	0.82	14.6	1.45
Kolkata	11.5	0.35	10.8	0.68	12.4	0.35	14.1	1.48	11.3	0.45	12.5	1.36
Lucknow	10.2	0.67	9.1	0.53	10.6	0.59	10.0	0.55	10.5	0.71	10.5	0.89
Mumbai	11.0	0.29	10.4	0.18	11.9	0.28	11.8	0.88	10.4	0.37	11.3	0.63
Nagpur	8.4	0.41	7.5	0.71	10.1	0.43	9.1	0.68	8.9	0.59	8.9	0.77
Patna	9.5	0.50	8.9	0.66	10.2	0.55	9.6	0.49	9.3	0.68	9.2	0.58
Thiruvananthapuram	6.7	0.80	5.3	0.65	8.3	0.84	6.9	0.63	9.3	0.96	8.1	1.24
Chandigarh	11.0	0.47	10.4	0.27	11.0	0.63	10.8	0.85	10.1	0.91	10.4	0.95
Ranchi	7.2	0.48	6.5	0.60	7.9	0.46	7.5	0.43	7.5	0.64	7.6	0.79
Raipur	6.7	0.52	5.6	0.21	8.3	0.71	7.4	0.61	10.4	0.71	10.8	0.70
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-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
Jan-21	9.1	0.12	8.2	0.17	10.0	0.12	9.3	0.29	9.7	0.13	10.1	0.15
Mar-21	9.4	0.11	8.7	0.16	10.4	0.11	10.1	0.11	10.0	0.12	10.2	0.09
May-21	10.4	0.09	10.2	0.04	11.4	0.09	10.8	0.07	10.7	0.11	10.9	0.12
Jul-21	10.5	0.11	10.3	0.06	11.7	0.11	11.3	0.42	11.0	0.13	11.5	0.49
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-20	62.8	61.0	49.9	43.6	58.4
Jan-21	63.3	64.3	54.5	55.7	62.8
Mar-21	67.0	65.7	57.4	58.6	65.1
May-21	68.0	65.1	51.8	50.3	60.5
Jul-21	67.6	69.0	58.4	56.9	65.0
One Year Ahead
Jul-20	63.9	64.5	55.2	51.2	65.7
Jan-21	68.4	68.6	60.6	63.0	69.0
Mar-21	69.6	70.1	62.4	65.5	71.6
May-21	68.3	67.1	57.7	57.1	67.2
Jul-21	70.1	71.0	63.3	63.5	71.4
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: Jul-21
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	2	0	1	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	3
	1-<2	2	15	13	4	1	1	0	0	0	0	2	0	0	0	0	0	0	0	38
	2-<3	2	8	52	28	23	7	3	6	0	0	2	0	1	0	0	0	0	0	132
	3-<4	1	1	7	55	41	35	23	9	4	1	5	0	0	0	0	0	0	0	182
	4-<5	0	1	3	8	90	64	45	15	10	2	2	0	0	0	0	0	2	0	242
	5-<6	1	3	9	18	22	339	113	155	87	16	119	1	2	0	2	9	1	0	897
	6-<7	0	1	4	2	7	4	121	71	61	15	19	2	0	0	0	1	1	0	309
	7-<8	0	0	3	1	3	7	6	116	76	58	52	4	8	1	1	2	2	0	340
	8-<9	0	0	0	0	3	3	6	6	182	59	120	16	29	6	4	6	6	0	446
	9-<10	0	0	0	0	0	0	1	1	3	89	56	29	23	6	2	10	4	0	224
	10-<11	1	0	2	0	1	35	3	6	10	6	413	56	177	36	24	259	151	0	1180
	11-<12	0	0	0	0	0	0	1	0	2	0	1	13	4	5	6	6	2	0	40
	12-<13	0	0	0	0	1	0	0	0	0	0	4	0	28	4	13	36	16	0	102
	13-<14	0	0	0	0	1	0	0	0	0	0	0	0	0	7	2	12	8	0	30
	14-<15	0	0	0	0	0	0	0	0	0	0	0	0	0	0	6	3	14	0	23
	15-<16	0	0	0	0	0	3	0	1	0	0	7	0	1	3	0	95	159	0	269
	>=16	1	1	1	1	0	9	0	0	0	1	36	0	2	1	2	26	1421	4	1506
	Total	10	30	95	117	193	507	322	386	435	247	838	121	275	69	62	465	1787	4	5963
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: Jul-21
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	1	0	1	0	0	1	0	0	0	0	0	0	0	0	0	0	0	0	3
	1-<2	8	7	5	7	2	3	0	0	0	0	5	1	0	0	0	0	0	0	38
	2-<3	29	4	18	15	25	13	9	3	3	1	6	0	2	1	0	0	3	0	132
	3-<4	25	1	2	23	16	47	14	10	13	7	12	1	5	2	1	2	0	1	182
	4-<5	45	0	0	3	36	43	45	15	22	7	14	0	4	2	1	0	5	0	242
	5-<6	118	0	4	5	9	178	69	132	75	33	156	9	20	6	8	55	19	1	897
	6-<7	34	0	0	2	3	2	64	46	70	16	41	3	8	3	8	1	7	1	309
	7-<8	40	0	1	1	0	2	3	75	47	63	56	10	14	3	10	8	7	0	340
	8-<9	46	0	0	0	2	4	2	4	111	47	120	27	26	9	4	22	22	0	446
	9-<10	23	0	0	0	1	0	1	1	1	57	38	27	32	12	7	16	7	1	224
	10-<11	147	0	0	0	2	12	4	6	7	7	266	32	133	38	15	208	299	4	1180
	11-<12	4	0	0	1	0	0	0	0	0	0	1	10	6	4	4	3	7	0	40
	12-<13	12	0	0	0	0	0	0	0	0	0	1	0	18	1	9	32	29	0	102
	13-<14	5	0	0	0	0	0	0	0	0	0	0	0	0	4	1	8	12	0	30
	14-<15	2	0	0	0	0	0	0	0	0	0	0	0	0	0	4	2	15	0	23
	15-<16	26	0	0	0	0	0	0	0	1	0	4	0	0	2	0	55	181	0	269
	>=16	231	0	0	1	0	5	0	1	1	0	16	0	4	0	0	18	1224	5	1506
	Total	796	12	31	58	96	310	211	293	351	238	736	120	272	87	72	430	1837	13	5963
Note: Figures are based on sample observations

¹The 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 June 04, 2021.

²The 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.

³Unit-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).