The Inflation Expectations Survey of Households for March 2015 (39th round) captures the inflation expectations of 4,996 urban households across 16 cities, for the next three-month period and the next one-year period. These expectations are based on their individual consumption baskets and hence these rates should not be considered as benchmark of official measure of inflation. The households’ inflation expectations provide useful directional information on near-term inflationary pressures and also supplement other economic indicators.

Highlights:

1. Qualitative response from survey suggests that percentage respondents expecting general prices to rise by ‘more than current rate’ (i.e., respondents expect higher inflation) during the next three months and next one year have marginally increased. Inflation expectations were slightly higher across various product groups for both the horizons.

2. A similar pattern is witnessed in terms of quantitative responses. However, the current inflation perceptions, and inflation expectations on an average (both three-month ahead as well as one-year ahead) remained at single digit in current round (Chart1).

3. The survey shows that retired persons and housewives have comparatively higher level of inflation expectations for three-month ahead period based on median inflation rates. Respondents from Guwahati, Kolhapur, Nagpur, Patna and Lucknow cities expect relatively higher inflation for next three months.

¹ The previous round of the survey data was published on January 15, 2015 on RBI website. The survey results are based on views of the respondents which are not necessarily shared by the Reserve Bank of India.