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Households’ Inflation Expectations Survey

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].

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 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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