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Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the July 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 5,870 urban households.

Highlights:

i. Three months ahead median inflation expectations of households remained unchanged at 7.6 per cent i.e., the same as in the May 2019 round of the survey; one year ahead median inflation expectations moderated by 20 basis points to 7.9 per cent (Chart 1a, 1b, Table 2).

ii. Fewer households expect inflation to rise over the year ahead than in May 2019. (Table 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 Jun-18 Dec-18 Mar-19 May-19 Jul-19
General   Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 83.8 72.9 1.04 74.8 1.02 78.3 1.01 77.9 0.95
Price increase more than current rate 50.1 46.2 1.14 44.1 1.08 50.0 1.22 49.8 1.15
Price increase similar to current rate 26.4 23.3 0.96 26.9 0.97 25.6 1.01 24.7 0.98
Price increase less than current rate 7.3 3.4 0.39 3.8 0.41 2.8 0.32 3.4 0.38
No changes in prices 14.6 21.2 0.98 21.9 0.98 18.4 0.96 18.5 0.88
Decline in prices 1.6 5.8 0.46 3.4 0.36 3.3 0.35 3.6 0.39
Food Product                  
Prices will increase 81.4 70.7 0.98 73.7 0.96 78.5 0.87 80.0 0.87
Price increase more than current rate 47.8 42.7 1.08 43.6 1.06 48.5 1.13 48.5 1.09
Price increase similar to current rate 24.8 22.4 0.87 24.1 0.88 24.7 0.94 25.7 1.01
Price increase less than current rate 8.7 5.7 0.48 6.0 0.49 5.4 0.46 5.8 0.47
No changes in prices 13.3 17.2 0.79 17.5 0.84 15.0 0.77 13.8 0.75
Decline in prices 5.3 12.0 0.65 8.8 0.56 6.5 0.47 6.2 0.52
Non- Food Product                  
Prices will increase 78.2 67.6 1.00 71.3 0.94 75.8 0.91 73.8 0.97
Price increase more than current rate 44.5 40.8 1.08 41.0 1.02 45.2 1.15 43.1 1.14
Price increase similar to current rate 24.4 21.6 0.89 24.5 0.86 25.3 0.91 25.2 0.93
Price increase less than current rate 9.3 5.3 0.47 5.7 0.48 5.4 0.44 5.5 0.46
No changes in prices 17.7 20.5 0.85 21.9 0.87 18.1 0.81 20.4 0.90
Decline in prices 4.1 11.9 0.63 6.8 0.47 6.0 0.47 5.8 0.48
Household Durables                  
Prices will increase 58.7 56.8 1.08 59.5 1.05 61.3 1.12 57.9 1.07
Price increase more than current rate 32.6 34.8 1.08 35.2 0.99 37.0 1.12 33.7 1.05
Price increase similar to current rate 19.1 17.9 0.85 19.3 0.79 19.9 0.85 19.6 0.81
Price increase less than current rate 7.1 4.1 0.39 5.0 0.41 4.3 0.41 4.6 0.41
No changes in prices 30.9 24.8 0.91 27.7 0.96 27.2 1.01 28.2 0.96
Decline in prices 10.4 18.4 0.77 12.8 0.62 11.5 0.64 13.9 0.67
Cost of Housing                  
Prices will increase 71.6 69.1 1.03 68.1 0.98 70.9 1.06 68.6 1.01
Price increase more than current rate 45.3 46.5 1.06 44.2 0.97 46.9 1.13 45.2 1.04
Price increase similar to current rate 19.9 18.2 0.79 19.5 0.76 19.8 0.83 19.4 0.82
Price increase less than current rate 6.4 4.5 0.41 4.4 0.41 4.2 0.39 4.0 0.38
No changes in prices 20.7 22.2 0.94 22.4 0.88 21.7 0.96 22.8 0.90
Decline in prices 7.7 8.6 0.57 9.5 0.60 7.3 0.52 8.6 0.58
Cost of Services                  
Prices will increase 70.8 65.7 1.10 66.4 1.02 68.6 1.03 66.1 1.03
Price increase more than current rate 40.8 40.2 1.11 39.2 1.00 42.6 1.14 39.8 1.07
Price increase similar to current rate 22.8 21.2 0.82 21.9 0.84 21.7 0.89 21.6 0.83
Price increase less than current rate 7.3 4.3 0.41 5.3 0.45 4.3 0.41 4.7 0.42
No changes in prices 26.5 28.2 1.02 28.9 0.99 27.7 0.99 28.7 0.94
Decline in prices 2.6 6.1 0.45 4.7 0.42 3.8 0.37 5.3 0.46
Note: 1. The table provides estimates and standard errors for qualitative responses from the December 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 Jun-18 Dec-18 Mar-19 May-19 Jul-19
General   Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 91.6 83.8 0.82 84.4 0.90 86.3 0.77 83.8 0.87
Price increase more than current rate 59.8 57.5 1.15 54.6 1.08 58.5 1.19 56.8 1.15
Price increase similar to current rate 25.8 23.3 1.00 26.6 0.93 24.9 1.03 24.1 1.01
Price increase less than current rate 6.0 3.0 0.37 3.2 0.38 3.0 0.32 2.9 0.35
No changes in prices 6.5 11.3 0.73 12.6 0.83 10.2 0.70 12.6 0.78
Decline in prices 1.9 4.9 0.43 3.0 0.33 3.5 0.37 3.6 0.40
Food Product                  
Prices will increase 85.1 80.0 0.82 80.1 0.87 83.1 0.76 81.9 0.80
Price increase more than current rate 51.4 50.6 1.08 47.2 1.06 50.4 1.19 49.3 1.16
Price increase similar to current rate 26.5 24.7 0.93 28.0 0.88 27.6 0.97 27.7 0.98
Price increase less than current rate 7.1 4.7 0.43 5.0 0.44 5.1 0.43 4.8 0.42
No changes in prices 9.7 12.1 0.68 14.0 0.76 11.4 0.64 12.0 0.67
Decline in prices 5.3 7.9 0.52 5.9 0.45 5.5 0.43 6.1 0.49
Non- Food Product                  
Prices will increase 83.3 76.4 0.92 78.2 0.89 81.3 0.81 78.1 0.89
Price increase more than current rate 49.1 47.5 1.09 45.7 1.05 49.7 1.18 46.1 1.11
Price increase similar to current rate 26.6 24.2 0.92 27.5 0.89 26.8 0.99 27.1 0.97
Price increase less than current rate 7.6 4.7 0.43 5.0 0.41 4.9 0.44 4.9 0.44
No changes in prices 12.7 15.8 0.78 16.9 0.80 13.7 0.72 16.6 0.80
Decline in prices 4.0 7.7 0.54 5.0 0.41 5.0 0.43 5.3 0.47
Household Durables                  
Prices will increase 70.6 66.9 1.02 68.3 0.99 68.8 1.04 66.2 1.01
Price increase more than current rate 41.6 42.0 1.09 41.3 1.02 42.9 1.14 39.8 1.08
Price increase similar to current rate 21.8 20.4 0.84 22.6 0.81 21.9 0.88 22.0 0.91
Price increase less than current rate 7.2 4.5 0.40 4.4 0.41 4.0 0.40 4.3 0.39
No changes in prices 21.2 20.1 0.91 21.9 0.89 21.5 0.91 23.0 0.89
Decline in prices 8.2 13.0 0.69 9.8 0.57 9.7 0.59 10.9 0.61
Cost of Housing                  
Prices will increase 81.0 79.6 0.85 77.6 0.86 79.8 0.84 76.9 0.89
Price increase more than current rate 53.0 55.9 1.00 51.0 1.01 54.3 1.05 52.1 1.00
Price increase similar to current rate 21.5 19.8 0.78 22.9 0.77 21.9 0.84 21.5 0.83
Price increase less than current rate 6.5 3.9 0.39 3.8 0.36 3.6 0.37 3.4 0.34
No changes in prices 13.3 13.7 0.74 15.2 0.75 14.3 0.77 15.3 0.75
Decline in prices 5.7 6.7 0.50 7.2 0.53 5.9 0.45 7.8 0.55
Cost of Services                  
Prices will increase 84.1 77.9 0.88 78.8 0.87 80.9 0.83 77.1 0.93
Price increase more than current rate 49.5 49.0 1.11 47.5 1.02 50.3 1.12 47.2 1.12
Price increase similar to current rate 26.6 24.1 0.90 26.4 0.87 25.3 0.94 25.2 0.95
Price increase less than current rate 8.0 4.8 0.44 4.8 0.42 5.3 0.49 4.6 0.43
No changes in prices 13.7 17.1 0.82 17.4 0.81 15.5 0.77 17.8 0.82
Decline in prices 2.2 5.0 0.44 3.9 0.37 3.6 0.36 5.2 0.47
Note: 1. The table provides estimates and standard errors for qualitative responses from the December 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: July 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 7.9 0.10 6.6 0.15 8.6 0.10 7.6 0.12 8.3 0.13 7.9 0.18
Gender-wise                        
Male 8.0 0.13 6.9 0.19 8.8 0.14 7.9 0.16 8.4 0.16 8.0 0.23
Female 7.9 0.13 6.5 0.20 8.7 0.14 7.6 0.15 8.4 0.17 8.0 0.21
Category-wise                        
Financial Sector Employees 8.4 0.47 8.1 0.70 9.7 0.62 8.7 0.71 9.1 0.83 8.9 0.90
Other Employees 7.9 0.19 6.7 0.18 8.6 0.20 7.7 0.19 8.2 0.23 7.9 0.28
Self Employed 8.2 0.19 7.0 0.32 8.9 0.21 7.9 0.33 8.5 0.25 8.3 0.38
Homemaker 7.8 0.15 6.4 0.22 8.6 0.16 7.6 0.16 8.3 0.18 7.9 0.23
Retired Persons 8.7 0.35 8.0 0.50 9.4 0.37 8.8 0.47 9.2 0.43 9.7 0.59
Daily Workers 8.1 0.27 7.1 0.51 8.8 0.28 8.2 0.29 8.5 0.30 8.2 0.37
Other category 7.5 0.21 6.6 0.27 8.4 0.23 7.6 0.25 8.3 0.29 8.2 0.34
Age Group-wise                        
Up to 25 years 7.3 0.16 6.2 0.20 8.2 0.17 7.3 0.17 8.1 0.22 7.7 0.25
25 to 30 years 7.7 0.19 6.4 0.22 8.4 0.20 7.4 0.23 8.4 0.23 8.0 0.26
30 to 35 years 7.9 0.20 6.7 0.25 8.6 0.20 7.6 0.18 8.1 0.24 7.6 0.35
35 to 40 years 7.9 0.19 6.6 0.31 8.7 0.20 7.6 0.20 8.1 0.23 7.7 0.31
40 to 45 years 8.1 0.21 7.0 0.34 8.9 0.21 7.9 0.26 8.5 0.25 8.1 0.34
45 to 50 years 8.2 0.22 7.1 0.45 8.8 0.23 7.9 0.25 8.5 0.27 8.3 0.36
50 to 55 years 8.3 0.28 6.9 0.37 9.0 0.28 7.8 0.37 8.0 0.34 7.3 0.38
55 to 60 years 7.8 0.26 6.6 0.38 8.7 0.28 7.6 0.34 8.3 0.32 7.8 0.56
60 years and above 8.4 0.29 7.4 0.46 9.0 0.30 8.4 0.37 8.8 0.34 8.9 0.67
City-wise                        
Ahmedabad 7.7 0.31 6.7 0.55 8.9 0.38 8.0 0.45 8.6 0.43 7.9 0.52
Bengaluru 6.0 0.26 5.3 0.17 7.2 0.25 6.3 0.33 8.0 0.32 7.7 0.49
Bhopal 7.3 0.42 6.5 0.51 8.5 0.47 7.9 0.67 8.4 0.49 9.4 0.83
Bhubaneswar 6.2 0.46 5.8 0.35 7.1 0.60 6.8 0.48 8.0 1.19 8.1 1.02
Chennai 8.8 0.47 8.2 0.89 9.9 0.50 9.5 0.90 10.8 0.55 11.2 1.27
Delhi 7.5 0.20 6.4 0.24 7.9 0.23 6.9 0.29 6.9 0.32 6.4 0.39
Guwahati 6.1 0.42 5.7 0.32 6.9 0.58 6.9 0.94 6.8 0.83 6.8 1.24
Hyderabad 10.9 0.44 11.0 1.12 12.1 0.40 14.2 1.69 12.7 0.34 15.4 1.08
Jaipur 6.3 0.51 6.2 0.55 6.8 0.60 6.8 0.82 6.1 0.98 6.2 1.91
Kolkata 9.2 0.31 8.6 0.50 10.1 0.34 9.4 0.57 10.1 0.38 10.2 0.49
Lucknow 8.3 0.57 8.0 0.67 9.3 0.69 9.2 0.67 9.0 0.88 9.6 0.89
Mumbai 8.1 0.28 6.9 0.43 8.6 0.31 7.6 0.36 6.7 0.36 6.3 0.60
Nagpur 5.5 0.55 4.6 0.61 6.2 0.49 5.4 0.33 6.0 0.59 5.7 0.41
Patna 7.0 0.31 6.6 0.53 7.2 0.33 6.8 0.58 7.3 0.50 6.9 0.64
Thiruvananthapuram 6.1 0.46 5.5 0.41 7.6 0.50 6.9 0.82 9.6 0.58 9.5 0.89
Chandigarh 7.8 0.82 6.5 0.94 7.5 0.68 6.4 0.66 7.4 0.88 6.5 0.72
Ranchi 6.6 0.46 6.5 0.62 6.9 0.47 6.8 0.62 5.5 0.70 6.3 0.77
Raipur 6.7 0.56 5.6 0.49 7.0 0.46 5.8 0.56 5.5 0.74 5.1 0.64
Note: The table provides estimates and standard errors for quantitative responses for the July 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
Jun-18 8.9 -- 8.1 -- 9.5 -- 8.9 -- 9.8 -- 10.1 --
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
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
‘--‘ 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
Jun-18 65.6 64.7 53.8 60.0 63.7
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
Jul-19 66.1 65.5 55.3 60.8 65.0
One Year Ahead
Jun-18 71.9 71.4 60.9 67.4 71.9
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
Jul-19 72.3 71.2 61.5 70.0 72.4
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: July 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 33 3 5 0 1 4 0 0 0 0 2 0 0 0 0 0 1 0 49
1-<2 2 36 22 6 1 2 0 0 0 0 0 0 0 0 0 0 0 0 69
2-<3 1 12 155 95 64 21 1 0 1 0 0 0 0 0 0 0 0 0 350
3-<4 1 4 18 180 102 86 14 5 3 0 0 0 0 0 0 0 0 0 413
4-<5 0 1 15 32 260 129 75 15 8 1 1 0 1 0 0 1 0 0 539
5-<6 1 3 15 24 26 569 217 243 68 7 67 1 0 1 0 3 1 0 1246
6-<7 0 0 0 3 8 9 218 120 80 19 19 1 1 0 0 0 1 0 479
7-<8 0 0 2 3 2 17 11 216 84 49 35 4 6 0 1 0 0 1 431
8-<9 0 0 0 2 3 1 5 2 196 61 87 9 13 2 0 3 5 0 389
9-<10 0 0 0 0 1 0 1 2 8 59 41 15 9 3 1 8 2 0 150
10-<11 1 1 1 2 0 22 4 8 21 7 369 56 141 45 7 131 41 0 857
11-<12 0 0 0 0 0 0 0 0 0 0 2 34 16 6 4 2 1 0 65
12-<13 0 0 0 0 0 1 0 0 0 0 3 0 21 8 11 16 8 0 68
13-<14 0 0 0 0 0 0 0 1 0 0 1 0 0 2 3 8 3 0 18
14-<15 0 0 0 0 0 0 0 1 0 1 0 0 0 0 6 7 10 0 25
15-<16 0 0 0 1 0 5 0 0 1 0 5 0 1 0 0 82 92 1 188
>=16 2 0 0 1 0 4 0 0 0 0 12 0 1 1 1 12 498 2 534
Total 41 60 233 349 468 870 546 613 470 204 644 120 210 68 34 273 663 4 5870
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 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 28 4 3 1 1 3 4 0 0 0 5 0 0 0 0 0 0 0 49
1-<2 12 26 12 9 5 2 1 0 1 0 1 0 0 0 0 0 0 0 69
2-<3 69 3 84 34 67 59 13 7 6 0 6 0 0 0 0 1 0 1 350
3-<4 95 0 3 82 31 115 44 19 10 2 10 0 2 0 0 0 0 0 413
4-<5 130 1 3 11 131 67 93 37 34 7 17 1 2 0 2 2 1 0 539
5-<6 175 0 3 11 15 358 135 172 118 46 158 11 11 5 1 18 9 0 1246
6-<7 73 1 0 0 4 0 119 72 80 36 62 6 15 0 3 6 2 0 479
7-<8 75 0 0 2 1 4 3 127 51 68 52 10 16 5 5 5 7 0 431
8-<9 62 0 0 0 0 2 3 2 104 35 98 14 35 5 4 11 14 0 389
9-<10 19 0 0 1 0 0 0 2 1 32 34 21 16 2 0 14 8 0 150
10-<11 85 0 1 0 1 3 3 3 4 3 279 30 82 27 24 161 146 5 857
11-<12 15 0 0 0 0 0 0 0 0 0 2 14 16 3 1 8 6 0 65
12-<13 9 0 0 0 0 0 0 0 0 0 0 0 10 5 6 11 27 0 68
13-<14 4 0 0 0 0 0 0 0 0 0 0 0 0 2 0 7 5 0 18
14-<15 4 0 0 0 0 0 0 1 0 0 0 0 0 0 1 5 13 1 25
15-<16 18 0 0 0 0 0 0 0 0 0 3 0 1 0 0 63 103 0 188
>=16 53 0 0 0 0 2 1 0 0 0 8 0 2 1 0 6 455 6 534
Total 926 35 109 151 256 615 419 442 409 229 735 107 208 55 47 318 796 13 5870
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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