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Date : Apr 05, 2018
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the March 2018 round of the Inflation Expectations Survey of Households (IESH)1. The survey was conducted in 18 cities and the results are based on responses from 5,150 urban households covering various occupational categories (Table 1).

Highlights:

  1. The proportion of respondents expecting prices to increase in the next three months at more than the current rate further declined in the March 2018 round across all product groups (Table 2).

  2. Similar sentiments prevailed in respect of expectations on prices over the year ahead.

  3. Three months ahead and one year ahead median inflation expectations increased by 30 basis points (bps) and 10 bps, respectively, as compared with the December 2017 round (Chart1, Table 4).

  4. The perceived inflation rate reported by the respondents also rose by 50 bps between the two periods.

  5. Three months ahead median inflation expectations increased by 30 bps when compared with the March 2017 round, while one year ahead median inflation expectations softened by 20 bps.


Table 1: Respondents’ Profile (Category): Share in Total Sample – March 2018
Category of Respondents Share in Total (%) Target Share (%)
Financial Sector Employees 9.9 10.0
Other Employees 15.1 15.0
Self-employed 20.2 20.0
Homemakers 29.3 30.0
Retired Persons 9.7 10.0
Daily Workers 10.3 10.0
Others 5.5 5.0

Table 2: Product-wise Expectations of Prices for Three Months ahead and One Year ahead
(Percentage of Respondents)
Round Mar-17 Sep-17 Nov-17 Dec-17 Mar-18 Mar-17 Sep-17 Nov-17 Dec-17 Mar-18
Options: General Three Months Ahead One Year Ahead
Prices will increase 73.8 81.3 81.4 80.6 80.2 81.0 93.5 92.8 92.7 90.8
Price increase more than current rate 37.9 50.5 53.2 49.8 45.4 44.5 61.2 64.1 63.0 56.7
Price increase similar to current rate 27.3 25.4 23.1 24.6 27.2 28.5 27.3 23.8 23.9 28.0
Price increase less than current rate 8.6 5.4 5.1 6.2 7.5 8.0 5.0 4.8 5.8 6.2
No change in prices 21.5 15.8 16.3 17.4 17.8 13.6 4.1 5.5 5.3 7.1
Decline in prices 4.7 2.9 2.3 2.0 2.1 5.4 2.5 1.8 2.0 2.2
Options: Food Product Three Months Ahead One Year Ahead
Prices will increase 74.2 79.5 80.3 78.1 79.6 78.0 84.8 85.7 85.0 85.0
Price increase more than current rate 39.5 47.5 50.4 45.8 44.0 39.7 51.4 54.0 52.1 47.4
Price increase similar to current rate 24.7 24.8 23.2 23.4 24.9 29.0 27.5 25.2 24.9 28.9
Price increase less than current rate 9.9 7.3 6.7 8.9 10.7 9.3 6.0 6.5 8.1 8.7
No change in prices 16.5 13.3 12.9 15.5 15.4 12.8 9.3 9.0 10.4 10.2
Decline in prices 9.3 7.1 6.8 6.4 5.0 9.2 5.9 5.3 4.6 4.8
Options: Non-Food Product Three Months Ahead One Year Ahead
Prices will increase 69.6 74.7 75.7 73.3 75.0 72.3 81.4 81.4 80.5 80.0
Price increase more than current rate 34.1 43.4 47.1 41.2 39.6 35.1 48.2 51.2 48.8 44.2
Price increase similar to current rate 25.1 24.8 21.9 23.3 25.4 27.5 26.7 23.5 23.7 26.8
Price increase less than current rate 10.4 6.6 6.7 8.8 10.0 9.7 6.5 6.8 7.9 9.0
No change in prices 23.6 19.3 19.5 21.9 20.8 20.3 13.8 14.4 15.4 15.8
Decline in prices 6.8 5.9 4.8 4.8 4.2 7.4 4.8 4.2 4.2 4.3
Options: Household Durables Three Months Ahead One Year Ahead
Prices will increase 54.2 61.5 61.9 60.0 63.7 60.8 70.7 71.0 68.8 71.1
Price increase more than current rate 27.2 37.3 38.6 35.0 34.7 29.7 42.7 44.5 42.3 40.1
Price increase similar to current rate 19.3 19.1 17.4 18.6 20.7 22.8 22.6 20.7 19.8 23.4
Price increase less than current rate 7.6 5.1 5.8 6.4 8.3 8.3 5.4 5.8 6.7 7.7
No change in prices 30.8 25.3 26.8 28.8 26.2 25.3 19.1 20.3 21.7 19.9
Decline in prices 15.1 13.2 11.3 11.3 10.1 13.9 10.2 8.7 9.5 9.0
Options: Housing Prices Three Months Ahead One Year Ahead
Prices will increase 56.7 68.9 70.5 69.5 70.0 68.7 78.9 78.8 78.4 80.2
Price increase more than current rate 32.4 44.9 48.4 45.9 43.9 39.3 53.0 54.5 53.3 50.9
Price increase similar to current rate 16.9 19.2 17.0 18.0 18.8 21.5 20.8 19.4 19.2 22.5
Price increase less than current rate 7.4 4.9 5.0 5.6 7.3 8.0 5.1 4.9 5.9 6.8
No change in prices 24.9 20.0 20.1 21.0 22.4 16.9 12.4 13.6 14.0 13.9
Decline in prices 18.4 11.1 9.5 9.5 7.7 14.3 8.8 7.7 7.7 5.9
Options: Cost of Services Three Months Ahead One Year Ahead
Prices will increase 67.0 68.7 71.1 71.5 70.2 77.4 82.9 83.4 82.8 82.6
Price increase more than current rate 33.6 40.7 44.3 41.4 38.3 38.5 48.6 51.5 50.5 45.3
Price increase similar to current rate 23.8 22.5 20.7 23.2 23.5 28.5 27.9 25.2 24.3 28.6
Price increase less than current rate 9.7 5.5 6.2 6.8 8.3 10.4 6.4 6.7 8.0 8.7
No change in prices 27.5 27.3 25.8 25.6 26.6 17.4 13.5 14.0 14.2 14.9
Decline in prices 5.6 4.0 3.1 3.0 3.3 5.2 3.7 2.6 3.0 2.5
Note: Constituent items may not add up to totals, due to rounding off.

Table 3: 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)
Round No. Survey period ended Food Non-Food Households durables Housing Cost of services
Three Months Ahead
47 Mar-17 57.1 56.7 48.1 48.3 57.7
49 Sep-17 66.8 65.8 56.8 60.1 64.9
49B Nov-17 66.6 67.4 57.1 60.3 65.7
50 Dec-17 64.9 64.1 55.5 58.4 63.8
51 Mar-18 63.7 63.2 55.6 57.8 62.7
One Year Ahead
47 Mar-17 62.3 60.4 51.5 54.6 64.1
49 Sep-17 72.7 69.9 60.5 67.4 69.8
49B Nov-17 72.7 70.5 60.9 66.2 71.3
50 Dec-17 70.1 69.0 58.8 65.1 70.5
51 Mar-18 69.0 66.3 59.6 64.3 69.2

Table 4: Household Inflation Expectations – Current, Three Months and One Year Ahead
Survey Round Survey Period Ended Inflation rate in Per cent
Current Three Months Ahead One Year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
47 Mar-17 7.8 6.8 4.0 8.2 7.5 4.1 9.3 8.8 4.2
49 Sep-17 7.6 6.3 3.9 8.2 7.2 4.0 8.7 8.0 4.5
49B Nov-17 7.7 6.3 4.1 8.4 7.5 4.2 8.9 8.6 4.6
50 Dec-17 7.9 6.7 4.2 8.4 7.5 4.3 8.9 8.5 4.8
50 Mar-18 8.2 7.2 4.0 8.6 7.8 4.1 8.9 8.6 4.7

Table 5: Factors that Explain the Total Variability
Round No. Survey Period Ended Current Three Months Ahead One Year Ahead
47 Mar-17 City, Age-Group City, Category City, Category
49 Sep-17 City, Gender, Category City, Age-Group, Category City, Gender, Category
49B Nov-17 City, Category, Age-Group City, Category City, Category
50 Dec-17 City, Category, Age-Group, Gender City, Category, Age-Group City, Category
51 Mar-18 City, Age-Group, Gender City, Category, Age-Group, Gender City, Category

Table 6 : Various Group-wise Inflation Expectations: March 2018
  Current Three Months Ahead One Year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
Overall 8.2 7.2 4.0 8.6 7.8 4.1 8.9 8.6 4.7
Gender-wise
Male 8.2 7.3 4.0 8.6 7.8 4.2 8.8 8.5 4.7
Female 8.1 7.0 3.9 8.6 7.8 4.1 9.0 8.9 4.7
Category-wise
Financial Sector Employees 7.8 6.8 3.8 8.2 7.4 3.8 8.4 8.1 4.5
Other Employees 8.1 7.2 4.0 8.6 7.9 4.1 8.7 8.5 4.9
Self Employed 8.3 7.4 4.1 8.7 7.9 4.2 8.9 8.8 4.8
Homemakers 8.1 7.1 3.9 8.6 7.8 4.2 9.0 8.7 4.7
Retired Persons 8.4 7.3 4.2 8.7 7.8 4.3 8.8 8.3 4.8
Daily Workers 8.3 7.4 4.0 8.8 8.3 4.1 9.3 9.6 4.7
Other category 7.8 6.8 3.4 8.4 7.6 3.7 8.8 8.2 4.2
Age Group-wise
Up to 25 years 7.4 6.6 3.4 7.9 7.4 3.6 8.5 8.3 4.2
25 to 30 years 8.1 7.2 3.8 8.4 7.8 4.1 9.0 8.9 4.6
30 to 35 years 8.0 7.2 3.8 8.6 7.9 4.0 9.1 9.0 4.6
35 to 40 years 8.3 7.3 4.0 8.6 7.8 4.3 8.9 8.5 4.8
40 to 45 years 8.6 7.5 4.1 9.0 7.9 4.3 9.1 9.0 5.0
45 to 50 years 8.3 7.2 4.3 8.7 7.8 4.4 8.8 8.7 5.0
50 to 55 years 8.7 7.6 4.2 9.1 8.4 4.3 8.8 8.6 5.3
55 to 60 years 8.6 7.3 4.3 9.0 7.9 4.4 8.7 8.2 5.1
60 years and above 8.4 7.4 4.2 8.8 8.0 4.3 8.9 8.5 4.8
City-wise
Ahmedabad 9.3 8.9 4.4 10.2 10.1 4.3 10.7 10.5 4.5
Bengaluru 6.1 5.5 3.2 6.2 5.8 3.0 4.6 4.8 3.7
Bhopal 7.5 5.8 4.0 7.5 5.9 4.7 7.0 5.7 5.2
Bhubaneswar 8.3 7.7 3.3 9.9 9.1 3.7 11.5 10.8 3.7
Chennai 8.8 7.6 4.3 9.9 9.1 4.3 11.5 11.1 4.5
Delhi 8.7 8.1 3.5 8.5 8.0 3.7 8.7 8.4 4.0
Guwahati 10.7 11.4 5.4 9.3 10.2 5.7 9.5 10.3 5.7
Hyderabad 7.6 6.8 3.0 8.3 7.6 3.2 9.2 8.8 3.4
Jaipur 8.3 7.5 4.1 7.9 6.9 4.4 7.4 7.2 4.9
Kolkata 9.8 9.5 4.5 10.4 10.1 4.6 10.8 10.4 4.7
Lucknow 6.9 6.3 2.6 7.4 7.0 2.8 7.6 7.5 3.7
Mumbai 8.4 8.0 3.7 8.3 8.1 4.0 8.4 8.7 4.4
Nagpur 6.6 5.7 3.5 7.4 7.0 3.7 7.2 7.5 4.3
Patna 7.4 6.9 2.7 7.8 7.3 2.8 8.2 8.1 3.4
Thiruvananthapuram 8.6 7.8 4.1 9.7 10.0 4.3 9.3 10.1 5.7
Chandigarh 7.7 6.2 4.1 8.2 7.0 4.1 8.4 7.6 4.5
Ranchi 6.9 6.4 2.8 7.6 7.1 3.1 7.4 7.4 4.1
Raipur 5.8 5.4 2.7 6.5 5.7 3.1 7.0 6.8 4.5

Table 7: Cross-tabulation of Current and Three Months Ahead Inflation Expectations: March 2018
(Number of Respondents)
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 31 0 1 2 0 1 1 0 1 0 1 0 0 0 0 0 0 0 38
1-<2 3 23 9 4 2 2 0 0 0 0 0 0 0 0 0 0 0 0 43
2-<3 4 10 114 40 34 8 0 2 1 0 0 0 0 0 0 0 0 2 215
3-<4 6 1 10 101 66 43 10 1 1 4 1 0 0 0 0 0 0 4 248
4-<5 8 0 8 13 164 70 28 9 7 1 3 0 0 0 0 0 0 1 312
5-<6 13 5 20 17 20 604 148 162 64 8 54 0 0 0 0 4 0 6 1125
6-<7 2 1 4 4 6 16 254 105 63 22 15 0 3 0 0 0 0 3 498
7-<8 7 3 1 6 7 15 12 265 105 43 33 3 2 0 1 0 0 2 505
8-<9 5 1 5 1 1 7 7 3 159 92 64 3 11 0 1 1 1 5 367
9-<10 0 1 2 1 4 4 0 3 6 99 60 23 7 2 0 2 0 5 219
10-<11 4 0 2 6 2 29 1 12 8 6 336 52 110 34 7 97 22 7 735
11-<12 3 0 0 1 0 1 0 1 1 1 2 36 10 12 3 2 2 7 82
12-<13 1 0 0 0 0 3 0 0 1 0 2 1 29 9 16 12 6 1 81
13-<14 0 0 1 0 0 0 0 0 0 0 1 0 0 9 1 4 1 4 21
14-<15 0 0 0 0 0 0 0 0 1 0 1 0 1 1 17 1 8 0 30
15-<16 0 0 2 2 0 1 1 1 2 0 8 1 2 1 0 68 53 4 146
>=16 2 1 0 1 1 9 1 1 1 2 13 0 3 1 1 18 417 13 485
Total 89 46 179 199 307 813 463 565 421 278 594 119 178 69 47 209 510 64 5150

Table 8: Cross-tabulation of Current and One Year Ahead Inflation Expectations: March 2018
(Number of Respondents)
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 25 3 0 0 2 3 0 1 0 0 1 1 0 0 0 0 2 0 38
1-<2 10 16 5 4 3 3 1 1 0 0 0 0 0 0 0 0 0 0 43
2-<3 23 5 68 32 36 18 14 8 4 1 4 0 1 0 0 0 0 1 215
3-<4 27 2 4 57 32 68 17 14 6 5 7 2 1 1 0 1 0 4 248
4-<5 34 0 2 5 109 47 50 22 14 7 10 1 5 0 0 1 0 5 312
5-<6 123 2 4 15 11 371 87 163 94 50 122 14 19 3 0 29 9 9 1125
6-<7 46 1 0 2 2 3 162 66 91 42 39 11 14 1 0 3 5 10 498
7-<8 39 1 2 2 2 4 5 172 65 70 66 21 22 1 4 11 4 14 505
8-<9 26 0 2 1 1 7 1 3 100 39 115 19 26 8 1 8 4 6 367
9-<10 6 0 1 1 2 2 1 3 6 66 45 29 26 9 4 11 3 4 219
10-<11 59 0 1 3 1 12 2 4 7 7 263 36 67 13 16 109 122 13 735
11-<12 5 0 0 2 0 2 0 0 0 2 2 27 7 8 6 4 7 10 82
12-<13 4 0 0 0 0 0 0 0 1 0 0 0 21 6 10 9 28 2 81
13-<14 0 0 0 0 1 0 0 0 0 0 0 0 0 9 1 3 3 4 21
14-<15 2 0 0 0 0 0 2 0 0 0 1 0 0 1 16 3 5 0 30
15-<16 10 1 1 1 0 3 0 2 0 1 5 0 0 2 0 56 62 2 146
>=16 39 0 1 0 0 5 0 0 2 1 12 1 1 0 2 11 392 18 485
Total 478 31 91 125 202 548 342 459 390 291 692 162 210 62 60 259 646 102 5150

1 The survey, which is conducted at regular intervals by the Reserve Bank, provides useful directional information on near-term inflationary pressures and supplements other economic indicators. Inflation expectations canvassed in the survey are formed by respondents and may reflect their own consumption patterns. Hence, these should not be treated as benchmarks for official measures of inflation.


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