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Date : Dec 05, 2018
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the November 2018 round of the Inflation Expectations Survey of Households (IESH)1 2. The survey was conducted in 18 cities and the results are based on responses from 5,802 urban households covering various occupational categories.

Highlights:

i. The proportion of respondents expecting general prices to rise at more than the current rate in the next three months fell marginally in relation to the September 2018 round (Tables 1 a and b).

ii. For the one year ahead horizon, expectations were broadly unchanged.

iii. In quantitative terms also, three months ahead median inflation expectations eased by 40 basis points (bps) from the September 2018 round; however, their one year ahead expectations remained unchanged (Chart 1, Table 2).

iv. The gap between current perceptions and short-term inflation expectations narrowed but the difference between current perceptions and medium term expectations widened in the November 2018 round of the survey relative to the preceding round.

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)
Round Nov-17 May-18 Jun-18 Sep-18 Nov-18
Options: General Estimate SE Estimate SE
Prices will increase 81.4 82.3 83.8 80.4 0.92 77.9 0.91
Price increase more than current rate 53.2 50.5 50.1 49.1 1.15 47.4 1.12
Price increase similar to current rate 23.1 25.1 26.4 27.6 1.00 25.6 1.00
Price increase less than current rate 5.1 6.7 7.3 3.7 0.38 4.9 0.59
No change in prices 16.3 16.0 14.6 17.4 0.88 19.2 0.87
Decline in prices 2.3 1.7 1.6 2.2 0.31 2.9 0.33
Options: Food Product              
Prices will increase 80.3 82.0 81.4 79.5 0.89 77.2 0.89
Price increase more than current rate 50.4 48.3 47.8 48.9 1.12 46.4 1.03
Price increase similar to current rate 23.2 24.5 24.8 24.5 0.91 23.6 0.91
Price increase less than current rate 6.7 9.3 8.7 6.1 0.48 7.3 0.63
No change in prices 12.9 13.5 13.3 15.5 0.82 16.9 0.81
Decline in prices 6.8 4.5 5.3 4.9 0.40 5.9 0.46
Options: Non-Food Product              
Prices will increase 75.7 78.4 78.2 78.9 0.87 75.8 0.90
Price increase more than current rate 47.1 45.8 44.5 47.5 1.11 45.2 1.07
Price increase similar to current rate 21.9 24.0 24.4 25.3 0.91 24.1 0.94
Price increase less than current rate 6.7 8.6 9.3 6.1 0.48 6.5 0.61
No change in prices 19.5 18.1 17.7 17.1 0.81 18.5 0.79
Decline in prices 4.8 3.6 4.1 4.0 0.38 5.8 0.48
Options: Household Durables              
Prices will increase 61.9 63.2 58.7 56.6 1.05 57.9 1.06
Price increase more than current rate 38.6 36.7 32.6 32.4 1.05 33.8 1.03
Price increase similar to current rate 17.4 19.9 19.1 19.5 0.80 18.9 0.80
Price increase less than current rate 5.8 6.6 7.1 4.7 0.41 5.2 0.50
No change in prices 26.8 26.8 30.9 30.8 0.98 29.7 0.98
Decline in prices 11.3 10.0 10.4 12.5 0.66 12.4 0.66
Options: Housing Prices              
Prices will increase 70.5 71.6 71.6 67.1 0.92 68.7 0.96
Price increase more than current rate 48.4 47.6 45.3 45.2 1.02 44.5 1.05
Price increase similar to current rate 17.0 18.2 19.9 17.9 0.78 19.0 0.83
Price increase less than current rate 5.0 5.8 6.4 4.0 0.40 5.2 0.51
No change in prices 20.1 20.8 20.7 24.1 0.87 23.7 0.88
Decline in prices 9.5 7.7 7.7 8.8 0.59 7.6 0.54
Options: Cost of Services              
Prices will increase 71.1 72.0 70.8 67.7 1.04 68.2 0.99
Price increase more than current rate 44.3 42.9 40.8 41.8 1.15 40.4 1.06
Price increase similar to current rate 20.7 22.6 22.8 21.0 0.89 22.4 0.86
Price increase less than current rate 6.2 6.6 7.3 5.0 0.43 5.3 0.48
No change in prices 25.8 25.6 26.5 29.6 1.01 28.8 0.97
Decline in prices 3.1 2.4 2.6 2.7 0.33 3.0 0.35
Note:
1. The table provides estimates and standard errors for qualitative responses for the September and November 2018 rounds. 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)
Round Nov-17 May-18 Jun-18 Sep-18 Nov-18
Options: General Estimate SE Estimate SE
Prices will increase 92.8 91.1 91.6 88.3 0.77 89.7 0.65
Price increase more than current rate 64.1 62.6 59.8 59.7 1.15 60.0 1.11
Price increase similar to current rate 23.8 23.4 25.8 25.3 0.97 26.4 0.97
Price increase less than current rate 4.8 5.0 6.0 3.3 0.35 3.4 0.43
No change in prices 5.5 6.5 6.5 9.1 0.69 7.6 0.57
Decline in prices 1.8 2.4 1.9 2.6 0.32 2.7 0.33
Options: Food Product              
Prices will increase 85.7 85.6 85.1 84.8 0.78 85.4 0.73
Price increase more than current rate 54.0 53.4 51.4 52.5 1.16 52.3 1.14
Price increase similar to current rate 25.2 25.2 26.5 27.0 0.96 27.5 0.96
Price increase less than current rate 6.5 7.0 7.1 5.3 0.45 5.7 0.51
No change in prices 9.0 9.4 9.7 9.7 0.64 9.4 0.60
Decline in prices 5.3 5.0 5.3 5.5 0.45 5.2 0.45
Options: Non-Food Product              
Prices will increase 81.4 82.7 83.3 82.3 0.79 82.4 0.78
Price increase more than current rate 51.2 51.1 49.1 51.0 1.18 51.6 1.10
Price increase similar to current rate 23.5 25.3 26.6 26.1 0.91 25.2 0.90
Price increase less than current rate 6.8 6.3 7.6 5.2 0.44 5.6 0.50
No change in prices 14.4 13.2 12.7 13.1 0.70 12.7 0.68
Decline in prices 4.2 4.1 4.0 4.6 0.40 4.9 0.43
Options: Household Durables              
Prices will increase 71.0 72.5 70.6 67.5 0.97 70.1 0.98
Price increase more than current rate 44.5 45.2 41.6 40.7 1.10 43.0 1.10
Price increase similar to current rate 20.7 21.5 21.8 22.0 0.83 22.0 0.88
Price increase less than current rate 5.8 5.8 7.2 4.8 0.42 5.1 0.47
No change in prices 20.3 19.2 21.2 22.6 0.84 20.4 0.85
Decline in prices 8.7 8.3 8.2 10.0 0.58 9.6 0.61
Options: Housing Prices              
Prices will increase 78.8 79.8 81.0 77.9 0.89 80.6 0.79
Price increase more than current rate 54.5 55.2 53.0 52.9 1.08 53.8 1.04
Price increase similar to current rate 19.4 19.6 21.5 21.0 0.87 22.5 0.91
Price increase less than current rate 4.9 5.0 6.5 4.0 0.38 4.3 0.44
No change in prices 13.6 13.9 13.3 15.1 0.74 13.3 0.68
Decline in prices 7.7 6.3 5.7 7.0 0.52 6.1 0.50
Options: Cost of Services              
Prices will increase 83.4 84.2 84.1 82.0 0.81 83.3 0.75
Price increase more than current rate 51.5 52.9 49.5 49.7 1.18 52.2 1.11
Price increase similar to current rate 25.2 24.4 26.6 27.3 0.96 25.7 0.92
Price increase less than current rate 6.7 6.9 8.0 5.0 0.44 5.4 0.48
No change in prices 14.0 13.5 13.7 15.6 0.76 13.5 0.68
Decline in prices 2.6 2.4 2.2 2.4 0.29 3.1 0.34
Note:
1. The table provides estimates and standard errors for qualitative responses for the September and November 2018 rounds. 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: November 2018
  Current Three months ahead One year ahead
Mean Median Mean Median Mean Median
Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Overall 9.1 0.11 8.2 0.18 9.7 0.12 9.0 0.22 9.6 0.12 9.8 0.25
Gender-wise                        
Male 9.1 0.14 8.3 0.19 9.7 0.14 9.0 0.27 9.5 0.16 9.7 0.29
Female 9.2 0.17 8.6 0.35 9.8 0.17 9.4 0.40 9.9 0.20 10.1 0.20
Category-wise                        
Financial Sector Employees 9.1 0.58 7.2 0.69 9.7 0.59 8.3 0.80 9.3 0.66 8.5 0.79
Other Employees 9.0 0.20 8.2 0.24 9.5 0.21 8.8 0.30 9.3 0.24 9.3 0.41
Self Employed 8.7 0.19 8.0 0.29 9.3 0.20 8.9 0.38 9.2 0.24 9.8 0.39
Homemaker 9.4 0.18 9.0 0.44 9.9 0.19 9.6 0.43 9.9 0.22 10.2 0.18
Retired Persons 10.5 0.43 10.3 0.19 10.8 0.43 10.7 0.38 10.5 0.49 10.9 0.55
Daily Workers 9.5 0.32 8.7 0.55 10.0 0.31 9.4 0.58 9.5 0.36 9.4 0.61
Other category 8.6 0.25 7.5 0.33 9.1 0.26 8.4 0.28 9.4 0.28 9.4 0.56
Age Group-wise                        
Up to 25 years 8.4 0.19 7.1 0.26 9.0 0.20 8.1 0.21 9.4 0.24 9.0 0.36
25 to 30 years 8.7 0.19 7.9 0.28 9.2 0.19 8.5 0.22 9.3 0.23 9.5 0.37
30 to 35 years 9.2 0.22 8.5 0.35 9.8 0.22 9.4 0.44 9.6 0.25 9.8 0.40
35 to 40 years 9.1 0.22 8.5 0.44 9.8 0.23 9.5 0.46 9.8 0.25 10.0 0.27
40 to 45 years 9.6 0.24 9.1 0.55 10.1 0.24 10.0 0.29 9.8 0.28 10.2 0.25
45 to 50 years 9.3 0.26 8.6 0.44 10.0 0.27 9.7 0.47 9.9 0.31 9.9 0.48
50 to 55 years 9.6 0.32 9.3 0.66 10.1 0.32 10.1 0.37 9.9 0.38 10.1 0.48
55 to 60 years 9.9 0.40 9.6 0.69 10.5 0.38 10.1 0.50 9.9 0.42 10.0 0.61
60 years and above 10.0 0.39 9.9 0.50 10.5 0.40 10.2 0.41 10.5 0.42 11.0 0.56
City-wise                        
Ahmedabad 9.8 0.48 9.4 0.75 11.0 0.44 10.7 0.54 10.2 0.44 10.5 0.47
Bengaluru 6.6 0.47 5.5 0.18 7.4 0.46 5.9 0.34 8.1 0.40 7.1 0.55
Bhopal 7.6 0.60 6.1 0.60 8.7 0.59 7.6 0.67 9.1 0.62 9.5 0.81
Bhubaneswar 7.0 0.62 5.9 0.36 8.2 0.79 7.4 0.77 9.0 1.14 8.9 1.18
Chennai 8.0 0.44 7.0 0.57 8.9 0.47 8.1 0.57 9.4 0.47 8.9 0.69
Delhi 10.4 0.20 10.3 0.09 10.8 0.21 10.5 0.12 10.0 0.25 10.4 0.14
Guwahati 8.1 1.42 6.6 1.51 7.3 1.04 6.1 0.74 7.2 1.13 6.6 0.95
Hyderabad 8.8 0.48 7.1 0.58 9.5 0.47 8.5 0.68 10.2 0.50 10.0 0.64
Jaipur 7.3 0.38 7.3 0.55 7.9 0.48 7.7 0.54 8.0 0.69 8.4 1.01
Kolkata 9.6 0.34 8.5 0.72 10.2 0.35 9.5 0.67 10.4 0.41 10.0 0.51
Lucknow 9.6 0.53 9.2 0.66 10.4 0.52 9.9 0.58 10.0 0.64 10.6 0.35
Mumbai 10.5 0.24 10.3 0.18 10.6 0.33 10.5 0.25 10.3 0.32 10.7 0.29
Nagpur 9.6 0.59 8.9 0.92 10.4 0.62 9.6 0.79 9.8 0.71 10.1 1.24
Patna 6.5 0.36 5.9 0.28 6.8 0.44 6.4 0.59 6.8 0.40 6.7 0.61
Thiruvananthapuram 6.4 0.42 5.4 0.27 7.9 0.51 7.0 0.56 9.7 0.55 9.7 0.67
Chandigarh 9.0 1.21 8.5 1.58 8.8 1.06 8.0 1.24 9.1 1.13 8.3 1.33
Ranchi 7.0 0.37 6.7 0.31 7.6 0.41 7.3 0.49 8.6 0.47 9.2 0.86
Raipur 8.8 1.12 7.6 1.68 8.8 1.20 7.4 1.52 6.7 1.07 5.2 2.05
Note: The table provides estimates and standard errors for quantitative responses for the November 2018 round.

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)
Survey period ended Food Non-Food Households durables Housing Cost of services
Three Months Ahead
Nov-17 66.6 67.4 57.1 60.3 65.7
May-18 67.5 65.6 56.6 60.0 65.0
Jun-18 65.6 64.7 53.8 60.0 63.7
Sep-18 64.4 65.3 52.8 58.6 64.3
Nov-18 65.6 66.8 56.5 61.4 66.2
One Year Ahead
Nov-17 72.7 70.5 60.9 66.2 71.3
May-18 72.4 70.8 62.5 67.4 72.1
Jun-18 71.9 71.4 60.9 67.4 71.9
Sep-18 72.2 71.5 60.0 66.5 71.4
Nov-18 73.5 72.3 62.7 67.7 73.2
Note: Figures are based on sample observations

Table 4(a): Cross-tabulation of Number of Respondents by Current Inflation Perception and Three Months Ahead Inflation Expectations: November 2018
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 23 2 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 26
1-<2 0 28 12 4 0 1 0 0 0 0 0 0 0 0 0 0 0 0 45
2-<3 2 17 97 80 25 10 0 0 0 0 0 0 0 0 0 0 0 0 231
3-<4 1 10 8 101 94 50 11 1 1 0 0 0 0 0 0 0 0 0 277
4-<5 0 2 11 12 158 93 48 7 8 1 5 0 0 0 0 0 0 0 345
5-<6 3 6 20 20 25 549 150 190 62 10 52 0 0 0 0 3 1 1 1092
6-<7 1 2 1 2 4 12 213 87 81 19 11 1 2 0 0 0 0 0 436
7-<8 0 2 4 8 0 11 5 180 105 53 44 1 5 1 0 1 1 0 421
8-<9 0 1 3 0 3 4 5 8 188 65 86 7 11 1 1 1 1 0 385
9-<10 0 0 0 0 3 1 1 2 7 79 55 17 8 3 3 2 2 0 183
10-<11 0 0 0 3 1 28 6 11 17 8 485 42 162 30 11 131 43 1 979
11-<12 0 0 0 0 0 0 0 0 0 2 0 34 16 8 3 7 2 0 72
12-<13 0 0 0 0 0 1 0 0 0 0 3 1 46 9 8 11 6 0 85
13-<14 0 0 0 0 0 0 0 0 0 0 1 1 1 11 4 6 4 0 28
14-<15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 19 3 11 0 33
15-<16 0 0 0 1 0 1 0 0 1 1 8 1 1 2 1 151 100 0 268
>=16 0 0 0 1 2 9 1 2 0 0 13 1 4 1 0 22 824 16 896
Total 30 70 156 232 316 770 440 488 470 238 763 106 256 66 50 338 995 18 5802
Note: Figures are based on sample observations

Table 4(b): Cross-tabulation of Number of Respondents by Current Inflation Perception and One Year Ahead Inflation Expectations: November 2018
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 21 1 2 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 26
1-<2 9 13 8 7 4 4 0 0 0 0 0 0 0 0 0 0 0 0 45
2-<3 33 1 40 42 64 38 7 2 4 0 0 0 0 0 0 0 0 0 231
3-<4 14 3 5 51 50 111 20 8 10 1 4 0 0 0 0 0 0 0 277
4-<5 38 0 4 3 90 58 68 28 30 9 12 0 2 0 1 2 0 0 345
5-<6 109 0 5 9 8 289 107 202 103 40 172 8 15 4 2 11 7 1 1092
6-<7 45 1 0 2 2 7 116 68 84 31 58 8 10 0 1 3 0 0 436
7-<8 32 0 1 1 2 2 2 121 49 64 85 8 32 7 6 8 1 0 421
8-<9 44 0 1 0 2 2 2 1 95 34 111 11 50 4 5 13 9 1 385
9-<10 22 0 0 0 1 0 0 2 2 49 29 24 19 7 7 14 7 0 183
10-<11 104 0 0 0 2 3 5 11 6 2 325 25 100 39 29 192 131 5 979
11-<12 7 0 0 0 0 0 0 0 0 2 1 25 4 6 9 10 8 0 72
12-<13 5 0 0 0 0 0 2 0 0 0 1 1 28 7 5 19 17 0 85
13-<14 3 0 0 0 0 0 0 0 0 0 0 0 0 10 3 7 5 0 28
14-<15 5 0 0 0 0 0 0 0 0 0 0 0 0 0 11 2 15 0 33
15-<16 24 0 0 0 0 2 0 0 0 1 4 0 1 0 0 106 130 0 268
>=16 90 0 0 0 0 5 1 0 1 0 10 0 2 0 1 10 763 13 896
Total 605 19 66 115 225 523 330 443 384 233 812 110 263 84 80 397 1093 20 5802
Note: Figures are based on sample observations

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

2 As approved by the Technical Advisory Committee on Surveys (TACS), a two-stage probability sampling scheme was implemented in place of quota sampling from the September 2018 round onwards. Consequent changes in reporting the results of the survey are stated in the footnote to the respective tables. Further, city-wise sample size was revised in proportion to number of households of each city as per Census 2011, keeping the overall sample size 6,000.

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