The findings of Inflation Expectations Survey of Households conducted in the July-September 2011 quarter, the 25th round in the series is presented here. The survey captures the inflation expectations of 4,000 urban households across 12 cities for the next three-month and for the next one-year. These expectations are based on their individual consumption baskets and, hence, these rates should not be considered as predictors of any official measure of inflation. The households’ inflation expectations provide useful directional information on near-term inflationary pressures and also supplement other economic indicators to get a better indication of future inflation. The survey results are those of the respondents and not necessarily shared by the Reserve Bank of India. The current round of the survey shows that the percentage of respondents expecting price rise have gone down for all product groups (viz., food, non-food, household durables, housing and services) except three-month ahead price of housing. Expectations on general price rise were mainly influenced by movements in food prices. The threemonth ahead inflation expectations of households have moved higher at 12.2 per cent from 11.8 per cent in the last round of survey but one-year ahead inflation expectations has remained same at 12.9 per cent. The survey findings indicate that households expect inflation to rise further by 50 and 120 basis points during the next three-month and next one-year, respectively, from the perceived current rate of 11.7 per cent. On category-wise inflation expectations, daily-wage workers and housewives expected higher inflation rates compared to other categories. Across the cities, Jaipur expected the highest inflation while expectations were the lowest for Kolkata. 27 per cent of the respondents felt that the Reserve Bank is taking necessary action to control inflation, of which, 58 per cent felt that the Reserve Bank’s action has an impact on controlling inflation. I. Introduction Reserve Bank of India has been conducting Inflation Expectations Survey of Households (IESH) on a quarterly basis, since September 2005. The survey elicits qualitative and quantitative responses for short and long-term indicated by three and twelve-month period ahead on expected price changes and inflation. Inflation expectations of households (HHs) are subjective assessments and are based on their individual consumption baskets and, therefore, may be different from the official inflation numbers released periodically by the government. Again they may not be treated as forecast of any official measure of inflation, though these inflation expectations provide useful inputs on directional movements of future inflation. II. Sample Coverage and Information Sought The survey is conducted simultaneously in 12 cities that cover adult respondents of 18 years and above. The major metropolitan cities, viz., Delhi, Kolkata, Mumbai and Chennai are represented by 500 households each, while another eight cities, viz., Jaipur, Lucknow, Bhopal, Ahmedabad, Patna, Guwahati, Bangalore and Hyderabad are represented by 250 households each. The respondents are well-spread across the cities to provide a good geographical coverage. The male and female respondents in the group are usually in the ratio of 3:2. The sample coverage in terms of occupational category-wise representation is nearly as per the target (Table 1). The single page survey schedule (Annex) is organised into seven blocks covering the respondent profile (Block 1), general and product-wise short and long-term price expectations (Block 2 and 3), feedback on the Reserve Bank’s action to control inflation (Block 4), current and expected short and long-term inflation rate (Block 5), amount paid for the purchase of major food items during last one month (Block 6). From the current round, a new block (Block 7) has been added to seek respondents’ expectations on changes in their income/wages. The response options for price changes are (i) price increase more than current rate, (ii) price increase similar to current rate, (iii) price increase less than current rate, (iv) no change in prices and (v) decline in prices. The inflation rates are collected in intervals – the lowest being ‘less than 1 per cent’ and the highest being ‘16 per cent and above’ with 100 basis point size for all intermediate classes.
Table 1: Respondents’ Profile (Category): Share in Total Sample |
Category of Respondents |
Share in Total (%) |
Target Share (%) |
Financial Sector Employees |
9.9 |
10.0 |
Other Employees |
15.8 |
15.0 |
Self-Employed |
21.3 |
20.0 |
Housewives |
28.8 |
30.0 |
Retired Persons |
8.9 |
10.0 |
Daily Workers |
9.6 |
10.0 |
Other Categories |
5.8 |
5.0 |
Total |
100 |
100 |
Note: The above Sample proportion is for the quarter ended September 2011 survey |
III. Survey Results III.1General Price Expectations • The percentage of respondents expecting increase in general prices for both three-month ahead and one-year ahead have gone down to 96-97 per cent from around 99 per cent in the previous round (April-June 2011) (Table 2.1). • For both three-month and one-year ahead periods, the proportion of respondents who expect price increase to be ‘higher than current rate’ has increasedvis-à-vis last round (Table 2.1). III.2 Product Group-wise Price Expectations • The percentage of respondents expecting price increase has gone down for food products (Table 2.2), non-food products (Table 2.3), household durables (Table 2.4) and services (Table 2.6) but has gone up for three-month ahead expectations for housing prices (Table 2.5). • Proportion of households expecting price increase in next three-month by ‘more than the current rate’ has gone up marginally in case of food products, non-food products and household durables but significantly for housing and cost of services (Table 2). • However, vis-à-vis last round, more households expect cost of services to increase faster than the current rate in next one-year (Table 2.6).
Table 2: Percentage of Respondents – Product-wise Expectations of Prices for Three-month and One-year Ahead
Table 2.1: General |
Round No./survey period
(quarter ended) → |
16
Jun-09 |
17
Sep-09 |
18
Dec-09 |
19
Mar-10 |
20
Jun-10 |
21
Sep-10 |
22
Dec-10 |
23
Mar-11 |
24
Jun-11 |
25
Sep-11 |
Options |
Three-month ahead (percentage of respondents) |
Prices will increase |
93.1 |
95.8 |
97.4 |
95.7 |
95.3 |
96.5 |
98.6 |
96.0 |
98.7 |
97.3 |
Price increase more than current rate |
63.5 |
72.2 |
74.6 |
66.9 |
72.7 |
72.2 |
74.3 |
72.9 |
71.8 |
75.8 |
Price increase similar to current rate |
20.7 |
18.4 |
16.6 |
20.0 |
20.0 |
21.0 |
22.0 |
20.4 |
19.8 |
15.4 |
Price increase less than current rate |
8.9 |
5.1 |
6.2 |
8.8 |
2.6 |
3.3 |
2.3 |
2.7 |
7.1 |
6.0 |
No change in prices |
6.1 |
3.7 |
2.4 |
3.4 |
4.2 |
2.9 |
1.1 |
3.5 |
1.2 |
2.2 |
Decline in price |
0.9 |
0.6 |
0.3 |
0.9 |
0.5 |
0.6 |
0.4 |
0.5 |
0.1 |
0.6 |
Options |
One-year ahead (percentage of respondents) |
Prices will increase |
93.7 |
96.3 |
96.3 |
96.5 |
95.2 |
95.6 |
98.9 |
96.1 |
98.7 |
96.0 |
Price increase more than current rate |
62.8 |
69.5 |
68.2 |
62.8 |
70.8 |
70.4 |
77.4 |
73.4 |
73.3 |
73.5 |
Price increase similar to current rate |
18.5 |
17.3 |
15.2 |
19.8 |
18.7 |
19.7 |
17.9 |
18.6 |
18.0 |
16.7 |
Price increase less than current rate |
12.4 |
9.5 |
12.9 |
13.9 |
5.7 |
5.6 |
3.6 |
4.2 |
7.4 |
5.9 |
No change in prices |
5.3 |
3.1 |
3.1 |
2.6 |
3.8 |
3.5 |
0.9 |
3.5 |
1.3 |
3.3 |
Decline in price |
0.9 |
0.7 |
0.6 |
0.9 |
1.1 |
0.9 |
0.3 |
0.3 |
0.0 |
0.7 |
Table 2.2: Food Products |
Round No./survey period (quarter ended) → |
16 Jun-09 |
17 Sep-09 |
18 Dec-09 |
19 Mar-10 |
20 Jun-10 |
21 Sep-10 |
22 Dec-10 |
23 Mar-11 |
24 Jun-11 |
25 Sep-11 |
Options |
Three-month ahead (percentage of respondents) |
Prices will increase |
94.6 |
96.3 |
98.0 |
95.9 |
95.8 |
96.7 |
98.1 |
95.4 |
98.6 |
97.3 |
Price increase more than current rate |
64.5 |
76.1 |
81.1 |
70.4 |
74.9 |
74.7 |
73.1 |
69.4 |
72.0 |
74.2 |
Price increase similar to current rate |
21.5 |
15.0 |
11.7 |
15.5 |
17.7 |
18.0 |
21.3 |
21.0 |
17.5 |
17.2 |
Price increase less than current rate |
8.6 |
5.2 |
5.3 |
10.0 |
3.2 |
4.0 |
3.7 |
5.1 |
9.1 |
5.9 |
No change in prices |
4.6 |
3.0 |
1.4 |
3.1 |
3.5 |
2.3 |
1.4 |
3.8 |
1.2 |
1.9 |
Decline in price |
0.9 |
0.8 |
0.6 |
1.0 |
0.7 |
1.0 |
0.6 |
0.8 |
0.2 |
0.9 |
Options |
One-year ahead (percentage of respondents) |
Prices will increase |
94.7 |
96.2 |
96.5 |
96.8 |
95.6 |
95.7 |
98.6 |
95.9 |
98.6 |
95.8 |
Price increase more than current rate |
63.6 |
71.0 |
72.1 |
65.9 |
72.8 |
71.7 |
76.4 |
75.5 |
73.6 |
72.0 |
Price increase similar to current rate |
18.9 |
15.2 |
11.9 |
16.5 |
16.9 |
17.8 |
17.8 |
16.6 |
17.2 |
19.0 |
Price increase less than current rate |
12.2 |
10.0 |
12.5 |
14.5 |
5.9 |
6.2 |
4.4 |
3.9 |
7.9 |
4.8 |
No change in prices |
4.5 |
2.9 |
2.7 |
2.3 |
3.3 |
3.2 |
1.1 |
3.6 |
1.3 |
3.3 |
Decline in price |
0.8 |
0.9 |
0.9 |
0.9 |
1.1 |
1.1 |
0.4 |
0.5 |
0.1 |
0.9 |
Table 2.3: Non-Food Products |
Round No./survey period (quarter ended) → |
16 Jun-09 |
17 Sep-09 |
18 Dec-09 |
19 Mar-10 |
20 Jun-10 |
21 Sep-10 |
22 Dec-10 |
23 Mar-11 |
24 Jun-11 |
25 Sep-11 |
Three-month ahead (percentage of respondents) |
| Options |
Prices will increase |
91.4 |
94.7 |
95.8 |
94.0 |
92.9 |
95.4 |
95.9 |
95.0 |
98.0 |
95.6 |
Price increase more than current rate |
51.2 |
59.3 |
63.1 |
57.4 |
60.1 |
64.4 |
58.8 |
58.4 |
65.6 |
67.1 |
Price increase similar to current rate |
28.4 |
27.1 |
24.8 |
28.0 |
29.4 |
27.3 |
33.2 |
31.3 |
25.0 |
21.5 |
Price increase less than current rate |
11.8 |
8.3 |
7.9 |
8.7 |
3.4 |
3.7 |
3.9 |
5.3 |
7.4 |
7.0 |
No change in prices |
7.7 |
4.7 |
3.7 |
4.8 |
6.3 |
3.9 |
0.5 |
4.4 |
1.9 |
3.8 |
Decline in price |
1.0 |
0.7 |
0.5 |
1.2 |
0.9 |
0.7 |
0.7 |
0.6 |
0.1 |
0.7 |
Options |
One-year ahead (percentage of respondents) |
Prices will increase |
91.9 |
95.2 |
94.6 |
94.7 |
92.8 |
94.6 |
97.5 |
94.7 |
97.8 |
95.2 |
Price increase more than current rate |
53.1 |
59.6 |
60.7 |
53.0 |
59.7 |
64.0 |
65.2 |
59.9 |
66.9 |
66.4 |
Price increase similar to current rate |
25.0 |
23.6 |
20.7 |
27.6 |
26.4 |
24.9 |
28.1 |
29.2 |
24.0 |
22.7 |
Price increase less than current rate |
13.8 |
12.1 |
13.2 |
14.1 |
6.7 |
5.7 |
4.2 |
5.6 |
7.0 |
6.1 |
No change in prices |
7.3 |
4.0 |
4.6 |
4.2 |
5.9 |
4.4 |
2.2 |
4.6 |
2.0 |
4.1 |
Decline in price |
0.8 |
0.8 |
0.8 |
1.1 |
1.3 |
1.0 |
0.4 |
0.7 |
0.1 |
0.8 |
Table 2.4: Household Durables |
Round No./survey period (quarter ended) → |
16 Jun-09 |
17 Sep-09 |
18 Dec-09 |
19 Mar-10 |
20 Jun-10 |
21 Sep-10 |
22 Dec-10 |
23 Mar-11 |
24 Jun-11 |
25 Sep-11 |
Options |
Three-month ahead (percentage of respondents) |
Prices will increase |
80.0 |
86.8 |
87.7 |
86.4 |
87.1 |
89.7 |
91.9 |
90.4 |
91.7 |
91.0 |
Price increase more than current rate |
37.2 |
38.4 |
45.5 |
44.1 |
45.1 |
45.8 |
45.5 |
47.0 |
49.0 |
50.5 |
Price increase similar to current rate |
26.3 |
30.5 |
23.4 |
27.2 |
30.5 |
32.9 |
28.9 |
28.0 |
30.6 |
26.4 |
Price increase less than current rate |
16.5 |
18.0 |
18.9 |
15.1 |
11.6 |
11.0 |
17.5 |
15.4 |
12.1 |
14.1 |
No change in prices |
15.7 |
11.0 |
9.5 |
8.8 |
9.1 |
6.3 |
5.9 |
5.9 |
6.7 |
5.8 |
Decline in price |
4.4 |
2.2 |
2.9 |
4.8 |
3.8 |
4.1 |
2.4 |
3.8 |
1.7 |
3.3 |
Options |
One-year ahead (percentage of respondents) |
Prices will increase |
80.4 |
88.7 |
87.8 |
85.2 |
87.2 |
89.0 |
94.4 |
91.3 |
92.8 |
91.5 |
Price increase more than current rate |
38.4 |
43.3 |
45.5 |
43.2 |
46.6 |
46.3 |
48.6 |
49.6 |
52.0 |
52.2 |
Price increase similar to current rate |
24.3 |
28.2 |
22.1 |
25.4 |
30.1 |
31.8 |
32.5 |
29.0 |
25.7 |
26.0 |
Price increase less than current rate |
17.7 |
17.3 |
20.3 |
16.6 |
10.6 |
11.0 |
13.3 |
12.8 |
15.1 |
13.3 |
No change in prices |
16.2 |
9.1 |
8.5 |
9.6 |
8.0 |
6.7 |
3.8 |
5.7 |
5.4 |
6.2 |
Decline in price |
3.5 |
2.2 |
3.7 |
5.3 |
4.8 |
4.3 |
1.9 |
3.0 |
1.9 |
2.3 |
Table 2.5: Housing Prices |
Round No./survey period (quarter ended) → |
16 Jun-09 |
17 Sep-09 |
18 Dec-09 |
19 Mar-10 |
20 Jun-10 |
21 Sep-10 |
22 Dec-10 |
23 Mar-11 |
24 Jun-11 |
25 Sep-11 |
Options |
Three-month ahead (percentage of respondents) |
Prices will increase |
92.4 |
93.8 |
96.1 |
95.2 |
96.1 |
96.0 |
97.0 |
94.5 |
95.2 |
97.0 |
Price increase more than current rate |
55.9 |
64.4 |
70.8 |
60.4 |
70.8 |
64.6 |
73.1 |
73.5 |
65.4 |
73.5 |
Price increase similar to current rate |
25.4 |
22.0 |
19.8 |
25.4 |
21.0 |
24.8 |
21.3 |
18.3 |
23.5 |
18.2 |
Price increase less than current rate |
11.1 |
7.4 |
5.6 |
9.5 |
4.3 |
6.7 |
2.6 |
2.7 |
6.4 |
5.4 |
No change in prices |
6.4 |
5.0 |
3.4 |
3.5 |
3.1 |
2.8 |
2.1 |
4.7 |
4.5 |
2.2 |
Decline in price |
1.3 |
1.2 |
0.5 |
1.3 |
0.9 |
1.2 |
0.9 |
0.8 |
0.3 |
0.8 |
Options |
One-year ahead (percentage of respondents) |
Prices will increase |
93.0 |
94.9 |
96.4 |
94.1 |
96.1 |
95.3 |
97.9 |
94.8 |
97.6 |
95.8 |
Price increase more than current rate |
57.6 |
66.0 |
73.4 |
61.0 |
72.0 |
65.9 |
75.5 |
72.1 |
70.4 |
70.2 |
Price increase similar to current rate |
22.1 |
21.4 |
15.1 |
21.7 |
19.1 |
21.6 |
19.4 |
20.1 |
21.7 |
20.0 |
Price increase less than current rate |
13.3 |
7.6 |
7.9 |
11.4 |
5.0 |
7.9 |
3.0 |
2.7 |
5.6 |
5.6 |
No change in prices |
5.8 |
3.8 |
2.9 |
4.6 |
2.7 |
3.2 |
1.4 |
4.6 |
2.0 |
3.3 |
Decline in price |
1.2 |
1.3 |
0.7 |
1.3 |
1.2 |
1.5 |
0.8 |
0.6 |
0.4 |
0.9 |
Table 2.6: Cost of Services |
Round No./survey period (quarter ended) → |
16 Jun-09 |
17 Sep-09 |
18 Dec-09 |
19 Mar-10 |
20 Jun-10 |
21 Sep-10 |
22 Dec-10 |
23 Mar-11 |
24 Jun-11 |
25 Sep-11 |
Options |
Three-month ahead (percentage of respondents) |
Prices will increase |
87.3 |
92.4 |
91.7 |
89.9 |
94.1 |
94.2 |
94.1 |
91.6 |
96.2 |
95.3 |
Price increase more than current rate |
53.1 |
63.7 |
62.7 |
58.6 |
63.2 |
59.2 |
61.4 |
62.1 |
61.0 |
68.1 |
Price increase similar to current rate |
22.2 |
22.9 |
21.2 |
23.9 |
26.2 |
28.6 |
28.9 |
26.4 |
26.2 |
20.3 |
Price increase less than current rate |
12.0 |
5.8 |
7.8 |
7.5 |
4.8 |
6.4 |
3.8 |
3.1 |
9.1 |
6.8 |
No change in prices |
11.3 |
6.3 |
7.0 |
6.7 |
4.8 |
5.2 |
4.5 |
7.7 |
3.8 |
4.0 |
Decline in price |
1.5 |
1.3 |
1.4 |
3.4 |
1.1 |
0.6 |
1.4 |
0.7 |
0.0 |
0.8 |
Options |
One-year ahead (percentage of respondents) |
Prices will increase |
88.1 |
95.0 |
92.3 |
89.9 |
94.2 |
94.3 |
95.2 |
91.2 |
97.3 |
95.2 |
Price increase more than current rate |
54.4 |
65.6 |
62.9 |
57.2 |
63.2 |
58.0 |
64.6 |
62.6 |
62.7 |
66.3 |
Price increase similar to current rate |
20.2 |
21.5 |
18.5 |
23.0 |
24.9 |
29.5 |
25.7 |
24.4 |
25.3 |
23.4 |
Price increase less than current rate |
13.5 |
7.9 |
10.9 |
9.8 |
6.1 |
6.8 |
4.9 |
4.2 |
9.3 |
5.4 |
No change in prices |
10.3 |
4.1 |
6.0 |
6.9 |
4.6 |
4.9 |
4.1 |
8.2 |
2.6 |
4.2 |
Decline in price |
1.6 |
1.0 |
1.8 |
3.2 |
1.2 |
0.9 |
0.7 |
0.7 |
0.1 |
0.7 |
III.3 Coherence between General and Product Group-wise Price Expectations • As in the past rounds, the general price expectations are observed to be more aligned with food price expectations as compared with other product groups. Around 90 per cent of the respondents appeared to have been driven by expected changes in food prices for arriving at general price expectations (Table 3 and Table 4). • The extent of coherence between general price expectations and that of other product groups has by and large increased in the current survey round as compared with the previous round.The association was the lowest with household durables prices (Table 3 and Table 4).
Table 3: Percentage of Respondents Expecting General Price Movements in Coherence with Movements in Price Expectations of Various Product Groups: Three-month Ahead |
(percentage of respondents) |
Round No. |
Survey Quarter |
Food |
Non- Food |
House- hold Durables |
Housing |
Cost of Services |
16 |
Jun-09 |
87.0 |
79.3 |
59.4 |
72.0 |
76.7 |
17 |
Sep-09 |
89.1 |
81.3 |
56.5 |
78.1 |
82.2 |
18 |
Dec-09 |
88.3 |
83.6 |
62.3 |
82.7 |
79.3 |
19 |
Mar-10 |
87.4 |
81.4 |
66.5 |
78.1 |
76.6 |
20 |
Jun-10 |
89.9 |
82.4 |
63.6 |
80.2 |
80.8 |
21 |
Sep-10 |
91.4 |
86.1 |
64.8 |
79.2 |
76.7 |
22 |
Dec-10 |
92.3 |
77.3 |
58.9 |
82.5 |
76.6 |
23 |
Mar-11 |
85.5 |
78.9 |
62.5 |
82.5 |
76.4 |
24 |
Jun-11 |
88.5 |
83.0 |
68.1 |
80.4 |
80.0 |
25 |
Sep-11 |
88.8 |
86.2 |
68.0 |
84.4 |
85.2 |
Table 4: Percentage of Respondents Expecting General Price Movements in Coherence with Movements in Price Expectations of Various Product Groups: One-year Ahead |
(percentage of respondents) |
Round No. |
Survey Quarter |
Food |
Non- Food |
House- hold Durables |
Housing |
Cost of Services |
16 |
Jun-09 |
89.2 |
82.2 |
61.4 |
76.8 |
78.5 |
17 |
Sep-09 |
91.9 |
85.8 |
65.0 |
78.9 |
82.3 |
18 |
Dec-09 |
91.1 |
88.4 |
69.0 |
82.8 |
79.3 |
19 |
Mar-10 |
89.9 |
83.6 |
67.3 |
79.7 |
76.2 |
20 |
Jun-10 |
91.7 |
83.2 |
67.2 |
79.4 |
81.1 |
21 |
Sep-10 |
93.4 |
88.0 |
66.8 |
81.0 |
76.3 |
22 |
Dec-10 |
91.7 |
83.5 |
62.4 |
83.0 |
78.8 |
23 |
Mar-11 |
89.8 |
81.6 |
68.1 |
82.4 |
80.6 |
24 |
Jun-11 |
94.8 |
86.6 |
70.4 |
81.6 |
81.6 |
25 |
Sep-11 |
92.4 |
87.2 |
71.1 |
85.7 |
86.3 |
III.4 Inflation Expectations • The three-month ahead inflation expectations based on average of inflation rate reported by 4,000 households have tended upwards at 12.2 per cent from 11.8 per cent in the last round but one-year ahead inflation expectations have stayed at 12.9 per cent (Table 5 and Chart 1). • The respondents’ views on the current perceived and the three-month ahead expected inflation have increased by 50 and 40 basis points, respectively, vis-à-vis corresponding average rates reported in the previous round (Table 5). • Households expect inflation to rise further by 50 and 120 basis points during next three-month and next one-year, respectively, from the perceived current rate of 11.7 per cent. The expected rise from the current inflation for the periods ahead has, however, moderated vis-à-vis last round (Table 5). • For a large part of the survey history, the households’ inflation expectations remained between the WPI and CPI-IW inflation rates. However, from September 2010 round of the survey, household inflation expectations are higher than the official inflation rates (Chart 2). • Based on 10,000 re-samples using simple random sampling with replacement, 99 per cent bootstrap confidence intervals worked out for mean for short-term and long-term period have small width indicating the precision of point estimates for the population means of households’ expectations of inflation (Table 6).
Table 5: Household Inflation Expectations – Current, Three-month Ahead and One-year Ahead |
Survey Round |
Survey Quarter |
Three month Expectation period |
Inflation rate in Per cent |
Current |
Three-month Ahead |
One-year Ahead |
13 |
Oct-08 |
Oct-Dec 08 |
11.3 |
11.6 |
12.4 |
14 |
Dec-08 |
Jan-Mar 09 |
9.3 |
8.9 |
9.6 |
15 |
Mar-09 |
Apr-Jun 09 |
5.2 |
5.3 |
6.2 |
16 |
Jun-09 |
Jul-Sep 09 |
5.8 |
6.3 |
6.7 |
17 |
Sep-09 |
Oct-Dec 09 |
8.2 |
8.7 |
9.2 |
18 |
Dec-09 |
Jan-Mar 10 |
11.1 |
11.6 |
11.9 |
19 |
Mar-10 |
Apr-Jun 10 |
10.3 |
10.6 |
11.0 |
20 |
Jun-10 |
Jul-Sep 10 |
11.1 |
11.4 |
11.9 |
21 |
Sep-10 |
Oct-Dec 10 |
12.1 |
12.3 |
12.7 |
22 |
Dec-10 |
Jan-Mar 11 |
11.8 |
12.4 |
13.1 |
23 |
Mar-11 |
Apr-Jun 11 |
11.5 |
11.9 |
12.7 |
24 |
Jun-11 |
Jul-Sep 11 |
11.2 |
11.8 |
12.9 |
25 |
Sep-11 |
Oct-Dec 11 |
11.7 |
12.2 |
12.9 |
III.5 Variations in Responses • Over different rounds of the survey, the variations in the responses in terms of standard deviation has been observed to be lower for current inflation rate as compared to three-month ahead and one-year ahead expected inflation rates (Table 7). • Variation in consumption baskets and thereby the variability in responses for inflation expectations may partly be explained by different classificatory factors (viz., gender, age-group, city and category) of respondents over different rounds. • An Analysis of Variance (ANOVA) carried out over different rounds revealed that ‘city’ has always been a significant source of variation in each round followed by occupational ‘category’ (Table 8). • Survey shows that housewives and daily workers tend to have higher inflation expectations. No visible pattern emerged from age-wise profile of respondents (Table 9). • City-wise, inflation expectations were found the highest in Jaipur followed by Bangalore and the lowest in Kolkata (Table 9).
Table 6: 99% Bootstrap Confidence Intervals (BCI) based on 10,000 Resamples |
Current |
Three-month Ahead |
One-year Ahead |
99% BCI for Mean |
Interval width |
99% BCI for Mean |
Interval width |
99% BCI for Mean |
Interval width |
(11.56, 11.82) |
0.26 |
(12.07,12.35) |
0.28 |
(12.73,13.04) |
0.31 |
III.6 Cross-tabulation of Current Inflation and Future Expectations • The proportions of respondents perceiving and expecting inflation at double digit for short and long-term periods have increased as compared with those in the last round.
Table 7: Variability in Responses in Various Rounds |
Round No. |
Survey Quarter |
Inflation Rate |
Current |
Three-month Ahead |
One-year Ahead |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
15 |
Mar-09 |
5.2 |
1.9 |
5.3 |
2.6 |
6.2 |
2.7 |
16 |
Jun-09 |
5.8 |
4.4 |
6.3 |
4.6 |
6.7 |
4.7 |
17 |
Sep-09 |
8.2 |
6.0 |
8.7 |
6.0 |
9.2 |
5.9 |
18 |
Dec-09 |
11.1 |
4.9 |
11.6 |
4.9 |
11.9 |
5.1 |
19 |
Mar-10 |
10.3 |
4.4 |
10.6 |
4.7 |
11.0 |
4.8 |
20 |
Jun-10 |
11.1 |
3.6 |
11.4 |
4.1 |
11.9 |
4.2 |
21 |
Sep-10 |
12.1 |
3.2 |
12.3 |
3.6 |
12.7 |
3.8 |
22 |
Dec-10 |
11.8 |
3.5 |
12.4 |
3.7 |
13.1 |
3.6 |
23 |
Mar-11 |
11.5 |
3.1 |
11.9 |
3.7 |
12.7 |
3.6 |
24 |
Jun-11 |
11.2 |
3.4 |
11.8 |
3.3 |
12.9 |
3.3 |
25 |
Sep-11 |
11.7 |
3.1 |
12.2 |
3.4 |
12.9 |
3.7 |
Table 8: Factors that Explain the Total Variability |
Round No. |
Survey Quarter ended |
Current |
Three-month Ahead |
One-year Ahead |
15 |
Mar-09 |
City, Category |
City, Gender, Category |
City, Category |
16 |
Jun-09 |
City, Gender, Category, Age |
City, Gender, Category |
City, Category, Age |
17 |
Sep-09 |
City, Age |
City, Age |
City, Age |
18 |
Dec-09 |
City, Category, Age |
City, Age |
City |
19 |
Mar-10 |
City, Category, Age |
City, Category |
City, Category |
20 |
Jun-10 |
City, Category, Age |
City, Category, Age |
City, Category, Age |
21 |
Sep-10 |
City, Gender, Category, Age |
City, Gender, Category |
City, Category |
22 |
Dec-10 |
City, Category |
City, Category |
City, Category |
23 |
Mar-11 |
City, Category |
City, Category |
City, Category, Age |
24 |
Jun-11 |
City, Category |
City, Category |
City, Category |
25 |
Sep-11 |
City, Gender, Category |
City, Category |
City, Gender, Category |
Note: Results based on exercise using Analysis of Variance. |
• In particular, 64.5 per cent (52.8 per cent in previous round) of respondents perceived double digit current inflation. Similarly, 77.5 per cent (71.5 per cent in previous round) and 83.9 per cent (81.4 per cent in previous round) of the respondents expected double-digit inflation rates for the three-month ahead and oneyear ahead periods (Table 10, Table 11 and Chart 3).
Table 9: Various Group-wise Inflation Expectations for September 2011 Survey Round |
|
Current |
Three-month Ahead |
One-year Ahead |
|
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Mean |
Std. Dev. |
Gender-wise |
|
|
|
|
|
|
Male |
11.6 |
3.2 |
12.2 |
3.4 |
13.0 |
3.6 |
Female |
11.8 |
3.1 |
12.3 |
3.5 |
12.8 |
3.9 |
Category-wise |
|
|
|
|
|
|
Financial Sector Employees |
11.2 |
3.1 |
11.8 |
3.2 |
12.3 |
3.9 |
Other Employees |
11.7 |
3.2 |
12.2 |
3.4 |
13.0 |
3.5 |
Self-Employed |
11.6 |
3.1 |
12.1 |
3.5 |
12.8 |
3.7 |
Housewives |
11.9 |
3.1 |
12.4 |
3.4 |
13.0 |
3.7 |
Retired Persons |
11.8 |
3.2 |
12.2 |
3.7 |
12.8 |
4.1 |
Daily Workers |
12.2 |
3.2 |
12.7 |
3.5 |
13.4 |
3.5 |
Other category |
11.4 |
2.9 |
12.0 |
3.1 |
12.6 |
3.7 |
Age-wise |
|
|
|
|
|
|
Upto 25 years |
12.1 |
3.3 |
12.7 |
3.3 |
13.6 |
3.4 |
25 to 30 years |
11.8 |
3.1 |
12.5 |
3.2 |
13.1 |
3.3 |
30 to 35 years |
11.4 |
3.0 |
12.0 |
3.2 |
12.6 |
3.6 |
35 to 40 years |
11.5 |
3.1 |
12.0 |
3.4 |
12.9 |
3.4 |
40 to 45 years |
11.6 |
3.1 |
12.1 |
3.7 |
12.7 |
3.9 |
45 to 50 years |
11.6 |
3.2 |
12.1 |
3.4 |
12.7 |
3.9 |
50 to 55 years |
11.6 |
3.2 |
12.0 |
3.7 |
12.6 |
4.2 |
55 to 60 years |
11.5 |
3.4 |
12.3 |
3.3 |
12.9 |
3.7 |
60 years and above |
11.9 |
3.2 |
12.0 |
3.9 |
12.6 |
4.4 |
City-wise |
|
|
|
|
|
|
Mumbai |
14.0 |
3.0 |
13.9 |
4.0 |
15.2 |
3.1 |
Delhi |
11.8 |
3.2 |
12.3 |
3.5 |
13.5 |
3.2 |
Chennai |
11.3 |
1.9 |
12.3 |
1.9 |
11.8 |
3.0 |
Kolkata |
9.2 |
1.2 |
8.2 |
3.3 |
7.4 |
4.3 |
Bangalore |
15.4 |
2.4 |
15.6 |
2.2 |
15.8 |
1.9 |
Hyderabad |
11.2 |
0.7 |
11.9 |
1.5 |
12.7 |
1.6 |
Ahmedabad |
12.2 |
3.2 |
13.8 |
2.7 |
15.3 |
1.6 |
Lucknow |
10.9 |
3.4 |
12.2 |
2.9 |
13.4 |
2.7 |
Jaipur |
16.5 |
0.3 |
16.3 |
1.1 |
16.4 |
0.5 |
Bhopal |
9.2 |
1.3 |
10.5 |
1.5 |
12.4 |
2.2 |
Patna |
10.2 |
1.5 |
11.2 |
1.2 |
13.1 |
1.3 |
Guwahati |
9.1 |
0.8 |
10.0 |
0.8 |
10.8 |
1.2 |
All |
11.7 |
3.1 |
12.2 |
3.4 |
12.9 |
3.7 |
Table 10: Cross-tabulation of Current and Three-month Ahead Inflation Expectations |
Three-month ahead inflation rate (per cent) |
(No. of Respondents) |
|
|
< 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 |
Current inflation rate (per cent) |
<1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
1-2 |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
2-3 |
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
3-4 |
|
|
|
|
|
2 |
|
|
|
1 |
1 |
|
|
|
|
|
|
|
4 |
4-5 |
|
|
|
|
|
1 |
2 |
|
|
3 |
1 |
|
|
|
|
|
|
|
7 |
5-6 |
1 |
|
|
|
|
1 |
2 |
2 |
2 |
12 |
2 |
|
|
|
|
|
|
|
22 |
6-7 |
|
|
|
|
|
|
4 |
27 |
5 |
11 |
4 |
|
|
|
|
|
1 |
|
52 |
7-8 |
2 |
|
|
|
|
|
8 |
20 |
61 |
34 |
19 |
1 |
1 |
|
|
|
|
2 |
148 |
8-9 |
45 |
|
|
|
|
|
1 |
69 |
140 |
215 |
112 |
13 |
1 |
1 |
|
1 |
|
16 |
614 |
9-10 |
9 |
|
|
|
|
|
|
2 |
16 |
125 |
264 |
89 |
48 |
9 |
1 |
|
1 |
8 |
572 |
10-11 |
16 |
|
|
|
|
|
|
|
|
11 |
110 |
462 |
88 |
60 |
13 |
2 |
2 |
8 |
772 |
10-11 |
16 |
|
|
|
|
|
|
|
|
11 |
110 |
462 |
88 |
60 |
13 |
2 |
2 |
8 |
772 |
11-12 |
2 |
|
|
|
|
|
|
|
|
|
4 |
68 |
255 |
23 |
10 |
4 |
2 |
5 |
373 |
12-13 |
1 |
|
|
|
|
|
|
|
|
|
|
1 |
27 |
168 |
23 |
10 |
10 |
|
240 |
13-14 |
2 |
|
|
|
|
|
|
|
|
|
|
|
1 |
9 |
78 |
19 |
12 |
|
121 |
14-15 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
54 |
17 |
1 |
78 |
15-16 |
1 |
|
|
|
|
|
|
|
|
1 |
|
|
|
|
1 |
14 |
40 |
|
57 |
>=16 |
30 |
|
|
|
|
|
|
|
|
1 |
1 |
2 |
|
|
|
40 |
859 |
4 |
937 |
Total |
110 |
0 |
2 |
0 |
1 |
4 |
17 |
120 |
224 |
414 |
518 |
636 |
421 |
270 |
131 |
144 |
944 |
44 |
4000 |
Note: The shaded cells represent the number of respondents who perceived current inflation in double-digit and also expressed double-digit in the next three-month ahead. |
• A cross-tabulation of the current inflation perception with the future inflation expectations points out that among the 64.5 per cent respondents who perceived the current inflation in double-digit, around 96 per cent of respondents expected that it would remain in the same band for three-month ahead and one-year ahead periods (Table 10 and Table 11).
Table 11: Cross-tabulation of Current and One-year Ahead Inflation Expectations |
One-year ahead inflation rate (per cent) |
(No. of Respondents) |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
1-2 |
|
|
|
1 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
2-3 |
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
1 |
3-4 |
|
|
|
|
|
|
1 |
|
|
|
|
1 |
1 |
|
|
|
1 |
|
4 |
4-5 |
|
|
|
|
|
|
|
1 |
|
|
1 |
|
3 |
|
|
1 |
1 |
|
7 |
5-6 |
|
|
|
|
|
2 |
1 |
1 |
1 |
1 |
3 |
2 |
8 |
1 |
1 |
|
1 |
|
22 |
6-7 |
|
|
|
|
|
1 |
3 |
3 |
18 |
7 |
9 |
5 |
2 |
|
|
|
4 |
|
52 |
7-8 |
6 |
|
|
|
|
|
4 |
33 |
6 |
35 |
16 |
16 |
11 |
11 |
4 |
1 |
2 |
3 |
148 |
8-9 |
86 |
|
|
|
|
|
11 |
19 |
109 |
64 |
156 |
77 |
38 |
19 |
7 |
3 |
2 |
23 |
614 |
9-10 |
23 |
|
|
|
|
|
|
7 |
8 |
107 |
35 |
122 |
100 |
67 |
45 |
31 |
18 |
9 |
572 |
10-11 |
19 |
|
|
|
|
|
|
|
3 |
16 |
113 |
26 |
234 |
146 |
93 |
53 |
54 |
15 |
772 |
11-12 |
4 |
|
|
|
|
|
|
|
|
3 |
10 |
91 |
14 |
179 |
25 |
19 |
21 |
7 |
373 |
12-13 |
4 |
|
|
|
|
|
|
|
|
1 |
1 |
14 |
53 |
9 |
91 |
26 |
39 |
2 |
240 |
13-14 |
3 |
|
|
|
|
|
|
|
|
|
|
|
8 |
31 |
4 |
42 |
33 |
|
121 |
14-15 |
6 |
|
|
|
|
|
|
|
|
|
1 |
|
1 |
3 |
9 |
1 |
56 |
1 |
78 |
15-16 |
|
|
|
|
|
|
|
|
|
|
3 |
|
|
1 |
|
10 |
43 |
|
57 |
>=16 |
13 |
|
|
|
|
|
|
|
|
1 |
1 |
|
1 |
1 |
2 |
22 |
887 |
9 |
937 |
Total |
164 |
0 |
0 |
1 |
1 |
3 |
20 |
64 |
145 |
236 |
349 |
354 |
474 |
468 |
281 |
209 |
1162 |
69 |
4000 |
Note: The shaded cells represent the number of respondents who perceived current inflation in double-digit and also expressed double-digit in the next one-year ahead. |
 |
III.7 Awareness on Reserve Bank of India’s Action to Control Inflation • On the feedback of the Reserve Bank action to control inflation and its impact, the survey finds that 62.6 per cent of respondents are aware that RBI takes action on inflation control. Among these, 26.7 per cent felt that RBI is taking necessary action (Chart 4). • Among these 26.7 per cent, 58.1 per cent think that the action has an impact on controlling inflation (Chart 4). • While financial sector employees are mostly aware of the Reserve Bank role in controlling inflation, daily workers are largely unaware (Chart 5).
III.8 Expectations in Change of Income/Wages • Out of 2,257 respondents in the wage-earners/selfemployed/ daily workers categories, 45 per cent reported increase in wages/income in the past one year. 23 per cent of the respondents from these categories are expecting an increase in next threemonth and 55 per cent in next one-year. Going forward, 73 per cent (41 per cent) do not expect any change in wages/income in next three-month (next one-year) (Table 12). • Among the 45 per cent respondents who have reported wages/income increase in past one year, 55 per cent are from salaried class, 39 per cent are self-employed and 30 per cent are daily workers (Table 12). • 45 per cent of daily workers, 50 per cent of selfemployed and 63 per cent of financial sector and other employees expect increase in income in next one-year (Table 12).
Table 12: Respondent’s Expectation on Change in Wage/Income level |
Percentage of Response |
Category of Respondent |
Change in income since last year |
Change in income in three-month ahead period |
Change in income in one-year ahead period |
|
Increase |
Same |
Decrease |
Increase |
Same |
Decrease |
Increase |
Same |
Decrease |
Financial Sector Employees |
61.6 |
34.6 |
3.8 |
31.5 |
66.5 |
2.0 |
62.9 |
35.0 |
2.0 |
Other Employees |
51.8 |
45.3 |
2.9 |
21.4 |
76.5 |
2.1 |
63.4 |
34.3 |
2.2 |
Total Employees |
55.6 |
41.2 |
3.2 |
25.2 |
72.7 |
2.1 |
63.2 |
34.6 |
2.2 |
Self-Employed |
39.4 |
50.7 |
9.9 |
21.0 |
73.8 |
5.2 |
49.8 |
45.1 |
5.2 |
Daily Workers |
29.8 |
58.7 |
11.5 |
18.7 |
72.4 |
8.9 |
44.7 |
46.1 |
9.2 |
Total |
45.1 |
47.8 |
7.1 |
22.5 |
73.1 |
4.4 |
55.0 |
40.5 |
4.5 |
* |
