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Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the November 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 5,805 urban households.

Highlights:

i. Households’ inflation perceptions and expectations increased sharply in the November 2019 round on top of the pick-up in the previous round. Three months ahead and one year ahead median inflation expectations increased by 120 basis points and 180 basis points, respectively (Chart 1a, 1b, Table 2).

ii. More households expect higher inflation across all product groups over both three months ahead and one year ahead horizons vis-à-vis the previous round of the survey (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 Nov-18 May-19 Jul-19 Sep-19 Nov-19
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 77.9 0.91 78.3 1.01 77.9 0.95 79.3 0.94 80.7 0.90
Price increase more than current rate 47.4 1.12 50.0 1.22 49.8 1.15 49.0 1.23 52.4 1.22
Price increase similar to current rate 25.6 1.00 25.6 1.01 24.7 0.98 25.1 1.04 23.4 0.96
Price increase less than current rate 4.9 0.59 2.8 0.32 3.4 0.38 5.2 0.51 4.9 0.55
No changes in prices 19.2 0.87 18.4 0.96 18.5 0.88 18.6 0.92 17.3 0.84
Decline in prices 2.9 0.33 3.3 0.35 3.6 0.39 2.1 0.29 1.9 0.26
Food Product                    
Prices will increase 77.2 0.89 78.5 0.87 80.0 0.87 81.4 0.86 81.8 0.80
Price increase more than current rate 46.4 1.03 48.5 1.13 48.5 1.09 52.9 1.14 54.8 1.14
Price increase similar to current rate 23.6 0.91 24.7 0.94 25.7 1.01 21.4 0.88 21.0 0.85
Price increase less than current rate 7.3 0.63 5.4 0.46 5.8 0.47 7.1 0.59 6.0 0.54
No changes in prices 16.9 0.81 15.0 0.77 13.8 0.75 13.2 0.78 12.3 0.65
Decline in prices 5.9 0.46 6.5 0.47 6.2 0.52 5.4 0.45 5.9 0.48
Non- Food Product                    
Prices will increase 75.8 0.90 75.8 0.91 73.8 0.97 74.7 0.95 75.3 0.93
Price increase more than current rate 45.2 1.07 45.2 1.15 43.1 1.14 45.5 1.16 48.0 1.14
Price increase similar to current rate 24.1 0.94 25.3 0.91 25.2 0.93 21.8 0.90 21.1 0.86
Price increase less than current rate 6.5 0.61 5.4 0.44 5.5 0.46 7.3 0.57 6.1 0.53
No changes in prices 18.5 0.79 18.1 0.81 20.4 0.90 20.8 0.88 20.5 0.83
Decline in prices 5.8 0.48 6.0 0.47 5.8 0.48 4.5 0.42 4.3 0.39
Household Durables                    
Prices will increase 57.9 1.06 61.3 1.12 57.9 1.07 56.2 1.07 55.2 1.09
Price increase more than current rate 33.8 1.03 37.0 1.12 33.7 1.05 33.9 1.11 35.4 1.06
Price increase similar to current rate 18.9 0.80 19.9 0.85 19.6 0.81 17.3 0.80 15.2 0.73
Price increase less than current rate 5.2 0.50 4.3 0.41 4.6 0.41 4.9 0.45 4.6 0.44
No changes in prices 29.7 0.98 27.2 1.01 28.2 0.96 28.5 0.96 29.1 0.93
Decline in prices 12.4 0.66 11.5 0.64 13.9 0.67 15.4 0.73 15.8 0.73
Cost of Housing                    
Prices will increase 68.7 0.96 70.9 1.06 68.6 1.01 68.1 1.10 68.5 1.09
Price increase more than current rate 44.5 1.05 46.9 1.13 45.2 1.04 45.2 1.23 48.3 1.19
Price increase similar to current rate 19.0 0.83 19.8 0.83 19.4 0.82 17.9 0.81 16.4 0.77
Price increase less than current rate 5.2 0.51 4.2 0.39 4.0 0.38 5.0 0.44 3.8 0.41
No changes in prices 23.7 0.88 21.7 0.96 22.8 0.90 23.1 0.98 24.0 0.99
Decline in prices 7.6 0.54 7.3 0.52 8.6 0.58 8.7 0.59 7.4 0.53
Cost of Services                    
Prices will increase 68.2 0.99 68.6 1.03 66.1 1.03 63.5 1.04 65.8 1.05
Price increase more than current rate 40.4 1.06 42.6 1.14 39.8 1.07 40.2 1.15 43.6 1.14
Price increase similar to current rate 22.4 0.86 21.7 0.89 21.6 0.83 18.1 0.76 17.7 0.79
Price increase less than current rate 5.3 0.48 4.3 0.41 4.7 0.42 5.3 0.45 4.5 0.46
No changes in prices 28.8 0.97 27.7 0.99 28.7 0.94 31.6 1.00 29.5 1.01
Decline in prices 3.0 0.35 3.8 0.37 5.3 0.46 4.8 0.42 4.7 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 Nov-18 May-19 Jul-19 Sep-19 Nov-19
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 89.7 0.65 86.3 0.77 83.8 0.87 87.0 0.78 89.1 0.71
Price increase more than current rate 60.0 1.11 58.5 1.19 56.8 1.15 57.3 1.29 64.0 1.25
Price increase similar to current rate 26.4 0.97 24.9 1.03 24.1 1.01 25.1 1.07 21.5 0.96
Price increase less than current rate 3.4 0.43 3.0 0.32 2.9 0.35 4.6 0.47 3.6 0.44
No changes in prices 7.6 0.57 10.2 0.70 12.6 0.78 10.6 0.73 8.9 0.64
Decline in prices 2.7 0.33 3.5 0.37 3.6 0.40 2.4 0.31 2.0 0.28
Food Product                    
Prices will increase 85.4 0.73 83.1 0.76 81.9 0.80 83.0 0.86 86.2 0.74
Price increase more than current rate 52.3 1.14 50.4 1.19 49.3 1.16 52.2 1.23 58.9 1.24
Price increase similar to current rate 27.5 0.96 27.6 0.97 27.7 0.98 25.4 0.96 22.4 0.90
Price increase less than current rate 5.7 0.51 5.1 0.43 4.8 0.42 5.4 0.53 5.0 0.49
No changes in prices 9.4 0.60 11.4 0.64 12.0 0.67 11.9 0.76 9.4 0.61
Decline in prices 5.2 0.45 5.5 0.43 6.1 0.49 5.2 0.43 4.4 0.39
Non- Food Product                    
Prices will increase 82.4 0.78 81.3 0.81 78.1 0.89 78.6 0.94 81.0 0.82
Price increase more than current rate 51.6 1.10 49.7 1.18 46.1 1.11 48.1 1.25 53.5 1.23
Price increase similar to current rate 25.2 0.90 26.8 0.99 27.1 0.97 24.4 0.98 22.6 0.92
Price increase less than current rate 5.6 0.50 4.9 0.44 4.9 0.44 6.1 0.52 4.9 0.51
No changes in prices 12.7 0.68 13.7 0.72 16.6 0.80 16.6 0.85 15.5 0.72
Decline in prices 4.9 0.43 5.0 0.43 5.3 0.47 4.8 0.43 3.6 0.36
Household Durables                    
Prices will increase 70.1 0.98 68.8 1.04 66.2 1.01 64.1 1.04 65.4 1.00
Price increase more than current rate 43.0 1.10 42.9 1.14 39.8 1.08 39.0 1.17 42.7 1.16
Price increase similar to current rate 22.0 0.88 21.9 0.88 22.0 0.91 19.4 0.82 18.1 0.80
Price increase less than current rate 5.1 0.47 4.0 0.40 4.3 0.39 5.6 0.49 4.6 0.46
No changes in prices 20.4 0.85 21.5 0.91 23.0 0.89 24.2 0.90 22.5 0.84
Decline in prices 9.6 0.61 9.7 0.59 10.9 0.61 11.8 0.64 12.1 0.62
Cost of Housing                    
Prices will increase 80.6 0.79 79.8 0.84 76.9 0.89 77.3 0.89 80.0 0.92
Price increase more than current rate 53.8 1.04 54.3 1.05 52.1 1.00 51.8 1.15 57.1 1.20
Price increase similar to current rate 22.5 0.91 21.9 0.84 21.5 0.83 20.6 0.85 19.1 0.85
Price increase less than current rate 4.3 0.44 3.6 0.37 3.4 0.34 4.8 0.45 3.9 0.41
No changes in prices 13.3 0.68 14.3 0.77 15.3 0.75 15.5 0.73 13.9 0.76
Decline in prices 6.1 0.50 5.9 0.45 7.8 0.55 7.2 0.53 6.1 0.48
Cost of Services                    
Prices will increase 83.3 0.75 80.9 0.83 77.1 0.93 79.0 0.93 80.9 0.87
Price increase more than current rate 52.2 1.11 50.3 1.12 47.2 1.12 50.0 1.23 53.7 1.23
Price increase similar to current rate 25.7 0.92 25.3 0.94 25.2 0.95 22.7 0.93 22.3 0.86
Price increase less than current rate 5.4 0.48 5.3 0.49 4.6 0.43 6.3 0.51 4.9 0.51
No changes in prices 13.5 0.68 15.5 0.77 17.8 0.82 17.2 0.85 15.9 0.77
Decline in prices 3.1 0.34 3.6 0.36 5.2 0.47 3.8 0.38 3.2 0.36
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: November 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 9.1 0.10 8.2 0.17 9.8 0.11 9.2 0.23 9.7 0.12 9.9 0.19
Gender-wise                        
Male 9.1 0.13 8.3 0.19 9.7 0.14 9.3 0.29 9.4 0.18 9.4 0.36
Female 9.1 0.15 8.2 0.24 9.9 0.15 9.1 0.28 9.9 0.17 10.1 0.18
Category-wise                        
Financial Sector Employees 7.9 0.37 7.3 0.51 8.4 0.41 7.7 0.64 8.5 0.47 8.3 0.49
Other Employees 9.0 0.20 8.4 0.29 9.7 0.21 9.1 0.40 10.0 0.22 10.0 0.33
Self Employed 9.5 0.20 9.1 0.47 10.1 0.21 10.0 0.28 9.7 0.26 10.0 0.33
Homemaker 9.1 0.17 8.3 0.25 10.0 0.17 9.3 0.33 9.9 0.20 10.1 0.18
Retired Persons 9.6 0.33 9.6 0.67 10.3 0.36 10.1 0.34 9.8 0.45 10.0 0.44
Daily Workers 9.4 0.26 8.9 0.53 10.4 0.27 10.2 0.26 9.8 0.34 10.2 0.29
Other category 8.4 0.24 7.6 0.32 9.2 0.24 8.5 0.33 9.4 0.27 9.0 0.40
Age Group-wise                        
Up to 25 years 8.4 0.18 7.7 0.24 9.1 0.19 8.6 0.28 9.5 0.23 9.4 0.38
25 to 30 years 9.0 0.18 8.1 0.31 9.8 0.19 9.1 0.34 9.9 0.22 9.9 0.30
30 to 35 years 8.8 0.20 8.0 0.33 9.6 0.21 8.8 0.37 9.5 0.25 9.9 0.32
35 to 40 years 9.3 0.20 8.6 0.36 10.1 0.20 9.6 0.37 9.8 0.26 10.1 0.24
40 to 45 years 9.1 0.24 8.3 0.29 9.8 0.25 9.2 0.41 9.5 0.29 9.7 0.46
45 to 50 years 9.3 0.26 8.6 0.58 10.1 0.27 9.8 0.47 9.7 0.32 9.8 0.51
50 to 55 years 9.4 0.27 8.6 0.51 10.2 0.28 9.8 0.52 9.6 0.35 9.8 0.67
55 to 60 years 9.7 0.31 9.6 0.55 10.4 0.33 10.1 0.33 10.1 0.39 10.4 0.24
60 years and above 9.4 0.30 8.8 0.55 10.1 0.30 9.9 0.47 9.4 0.39 9.7 0.69
City-wise                        
Ahmedabad 9.8 0.29 9.8 0.46 10.6 0.32 10.3 0.29 10.1 0.41 10.4 0.33
Bengaluru 7.1 0.37 5.8 0.26 8.3 0.37 7.3 0.45 8.6 0.39 8.0 0.48
Bhopal 8.0 0.63 6.5 0.71 9.1 0.66 8.4 0.91 9.3 0.64 9.5 0.90
Bhubaneswar 7.3 0.65 6.1 0.53 8.1 0.71 7.2 0.85 7.3 1.51 7.2 2.10
Chennai 10.4 0.55 10.1 0.52 11.3 0.56 11.0 0.99 11.9 0.42 12.8 1.36
Delhi 8.2 0.20 7.1 0.38 8.9 0.22 8.0 0.34 9.1 0.26 8.8 0.49
Guwahati 6.8 0.77 6.0 0.54 6.9 0.83 6.0 0.66 7.0 1.17 6.7 1.07
Hyderabad 11.0 0.47 10.8 0.57 12.2 0.43 13.0 1.10 12.7 0.36 14.7 0.92
Jaipur 8.4 0.38 7.7 0.40 8.9 0.39 8.2 0.47 8.4 0.71 8.6 0.76
Kolkata 9.8 0.30 9.1 0.68 10.4 0.32 9.9 0.48 10.5 0.34 10.1 0.55
Lucknow 10.4 0.52 10.2 0.48 11.2 0.65 11.5 1.27 10.3 0.88 11.0 1.42
Mumbai 10.0 0.25 9.8 0.37 10.3 0.33 10.2 0.31 9.1 0.41 9.9 0.53
Nagpur 8.8 0.55 7.5 0.77 10.1 0.46 9.3 0.69 10.3 0.56 10.1 0.44
Patna 7.1 0.29 6.9 0.44 7.5 0.33 7.3 0.47 7.7 0.45 7.8 0.57
Thiruvananthapuram 6.4 0.45 5.6 0.33 7.9 0.60 6.9 0.68 9.8 0.67 9.1 0.89
Chandigarh 8.7 0.86 8.1 1.02 8.8 0.74 8.5 0.80 8.7 0.79 8.5 0.89
Ranchi 6.5 0.55 5.8 0.42 6.2 0.59 5.8 0.61 5.9 1.11 5.8 0.97
Raipur 9.0 0.63 8.0 1.13 9.3 0.66 8.3 1.14 7.2 0.76 6.5 1.05
Note: The table provides estimates and standard errors for quantitative responses for the November 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
Nov-18 9.1 0.11 8.2 0.18 9.7 0.12 9 0.22 9.6 0.12 9.8 0.25
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
Sep-19 8.2 0.12 7.1 0.18 8.9 0.12 8 0.15 8.6 0.13 8.1 0.19
Nov-19 9.1 0.10 8.2 0.17 9.8 0.11 9.2 0.23 9.7 0.12 9.9 0.19
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
Nov-18 65.6 66.8 56.5 61.4 66.2
May-19 66.4 65.4 56.8 62.0 66.2
Jul-19 66.1 65.5 55.3 60.8 65.0
Sep-19 62.7 62.1 50.2 56.8 61.2
Nov-19 64.7 65.1 51.0 60.7 63.1
One Year Ahead
Nov-18 73.5 72.3 62.7 67.7 73.2
May-19 71.6 71.3 62.7 70.7 72.5
Jul-19 72.3 71.2 61.5 70.0 72.4
Sep-19 70.7 67.5 56.8 65.5 70.0
Nov-19 73.9 70.9 57.8 69.7 72.3
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: November 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 8 1 6 3 0 1 1 0 0 0 0 0 0 0 0 0 0 0 20
1-<2 2 29 12 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 45
2-<3 3 7 96 52 36 9 6 0 0 0 0 0 0 0 0 0 0 0 209
3-<4 3 2 8 124 55 48 24 2 0 0 0 0 0 0 0 0 0 0 266
4-<5 1 1 8 15 160 87 55 12 8 0 3 0 0 0 0 0 0 0 350
5-<6 4 6 20 28 16 509 172 196 85 14 70 1 0 0 0 5 1 1 1128
6-<7 1 2 2 3 2 9 199 73 65 10 16 1 0 0 0 0 0 0 383
7-<8 0 0 2 2 6 8 3 185 105 69 51 3 4 1 3 3 1 1 447
8-<9 1 0 1 1 3 6 10 2 159 81 99 9 12 4 1 6 4 0 399
9-<10 0 0 1 0 0 1 0 1 4 89 51 20 11 1 3 3 2 0 187
10-<11 0 0 4 3 3 30 6 18 23 6 426 67 149 46 12 163 65 3 1024
11-<12 0 0 0 0 0 0 0 0 0 0 1 19 27 5 3 8 2 1 66
12-<13 0 0 0 0 0 2 0 0 1 2 2 0 43 10 9 23 7 0 99
13-<14 0 0 0 0 0 0 0 0 0 0 1 0 0 8 10 9 5 0 33
14-<15 0 0 0 0 0 0 1 0 0 1 0 0 0 1 10 9 13 0 35
15-<16 0 0 1 1 1 1 0 0 0 1 7 0 1 1 0 83 103 1 201
>=16 0 0 0 0 1 7 0 2 0 0 15 0 0 0 0 18 857 13 913
Total 23 48 161 234 283 718 477 491 450 273 742 120 247 77 51 330 1060 20 5805
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: November 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 6 2 5 5 0 1 0 0 0 1 0 0 0 0 0 0 0 0 20
1-<2 6 18 11 8 1 1 0 0 0 0 0 0 0 0 0 0 0 0 45
2-<3 39 3 49 38 36 27 10 2 2 0 3 0 0 0 0 0 0 0 209
3-<4 42 0 4 58 44 58 29 12 12 3 2 0 1 0 0 1 0 0 266
4-<5 45 0 5 3 86 53 79 29 23 14 8 1 3 0 0 0 1 0 350
5-<6 123 3 8 9 10 286 126 197 102 32 161 9 12 3 0 34 11 2 1128
6-<7 50 0 3 0 1 4 115 55 70 17 45 5 9 1 3 4 1 0 383
7-<8 44 0 2 1 0 4 2 106 88 56 93 12 12 2 6 11 6 2 447
8-<9 34 0 1 1 1 4 5 2 84 49 126 17 37 9 4 13 12 0 399
9-<10 16 0 0 0 0 0 0 1 1 49 39 20 22 6 10 14 9 0 187
10-<11 101 0 1 0 0 20 4 8 9 4 264 46 108 43 26 239 149 2 1024
11-<12 9 0 0 0 0 0 0 0 0 0 2 7 13 13 6 6 10 0 66
12-<13 17 0 0 0 0 1 0 0 0 1 4 0 17 8 13 21 17 0 99
13-<14 3 0 0 0 0 0 0 0 0 0 1 0 0 2 7 8 12 0 33
14-<15 5 0 0 0 0 0 0 0 0 0 0 0 0 0 4 10 15 1 35
15-<16 9 0 0 1 0 0 0 1 0 1 1 0 1 1 0 55 131 0 201
>=16 86 0 0 0 0 3 0 0 0 0 6 0 1 0 0 14 793 10 913
Total 635 26 89 124 179 462 370 413 391 227 755 117 236 88 79 430 1167 17 5805
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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