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Date : Feb 05, 2021
Households’ Inflation Expectations Survey – January 2021

Today, the Reserve Bank released the results of January 2021 round of its bi-monthly Inflation Expectations Survey of Households (IESH)1. In view of the Covid-19 pandemic, the survey was conducted through field interviews wherever possible and telephonic interviews elsewhere, during January 02 to January 11, 2021 in 18 major cities. The survey has captured subjective assessments on price movements and inflation of 5,940 urban households2, based on their individual consumption baskets.

Highlights:

i. Households’ median inflation perception for the current period and three months ahead inflation expectation declined by 60 basis points and 80 basis points, respectively, as compared to the November 2020 round whereas one year ahead inflation expectation remained unchanged [Charts 1a and 1b; Table 3].

ii. Respondents were more uncertain about future inflation than in the past few survey rounds as reflected in the widened confidence interval [Charts 1a and 1b; Table 3].

iii. More households expect general prices as well as inflation to increase in the next one year. This is prominent in case of food and non-food commodities [Table 1b].

iv. Households expect more pressure on price of services over one year horizon when compared to one quarter horizon.

Chart_1

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 Jan-20 Jul-20 Sep-20 Nov-20 Jan-21
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 83.2 0.87 83.5 0.92 81.6 0.78 83.3 0.85 83.7 0.89
Price increase more than current rate 56.1 1.16 52.2 1.14 53.9 1.02 55.4 1.14 56.0 1.26
Price increase similar to current rate 23.4 0.91 26.0 1.03 22.5 0.84 23.6 0.95 22.4 0.95
Price increase less than current rate 3.6 0.37 5.3 0.54 5.2 0.46 4.4 0.46 5.3 0.53
No changes in prices 14.4 0.81 14.0 0.84 15.9 0.74 14.2 0.81 14.3 0.86
Decline in prices 2.4 0.31 2.5 0.43 2.5 0.31 2.4 0.32 1.9 0.30
Food Product                    
Prices will increase 81.7 0.80 82.3 0.86 80.4 0.80 81.5 0.83 80.9 0.95
Price increase more than current rate 56.0 1.11 54.7 1.08 52.6 1.00 54.7 1.10 54.2 1.16
Price increase similar to current rate 20.1 0.85 21.9 0.89 21.2 0.81 20.3 0.90 20.0 0.95
Price increase less than current rate 5.5 0.45 5.7 0.47 6.6 0.51 6.5 0.59 6.7 0.57
No changes in prices 11.2 0.67 13.2 0.75 14.3 0.70 11.6 0.67 13.0 0.82
Decline in prices 7.2 0.50 4.5 0.56 5.3 0.46 6.9 0.54 6.1 0.54
Non- Food Product                    
Prices will increase 77.8 0.91 79.1 0.99 75.8 0.87 74.8 0.99 79.3 0.98
Price increase more than current rate 51.4 1.15 48.3 1.11 47.3 0.99 48.0 1.11 51.6 1.20
Price increase similar to current rate 21.2 0.88 24.6 0.98 21.9 0.82 20.3 0.87 20.9 0.90
Price increase less than current rate 5.3 0.43 6.2 0.51 6.6 0.50 6.4 0.57 6.7 0.56
No changes in prices 17.7 0.82 15.2 0.87 19.2 0.80 20.1 0.92 16.9 0.91
Decline in prices 4.4 0.39 5.6 0.59 5.0 0.45 5.2 0.48 3.8 0.40
Household Durables                    
Prices will increase 60.3 1.02 57.8 1.14 56.3 1.02 60.3 1.09 64.3 1.11
Price increase more than current rate 37.9 1.03 34.7 1.07 35.0 0.96 38.2 1.11 42.5 1.15
Price increase similar to current rate 17.5 0.76 17.6 0.87 15.8 0.74 16.2 0.82 16.8 0.77
Price increase less than current rate 4.8 0.43 5.4 0.48 5.5 0.47 5.8 0.59 5.0 0.49
No changes in prices 26.8 0.91 28.4 1.00 30.7 0.94 27.4 1.00 27.2 1.05
Decline in prices 12.9 0.65 13.8 0.86 13.1 0.69 12.3 0.71 8.4 0.58
Cost of Housing                    
Prices will increase 69.7 1.04 46.9 1.08 51.8 0.98 60.7 1.12 66.1 1.11
Price increase more than current rate 48.4 1.10 28.1 0.98 32.8 0.93 40.4 1.14 45.1 1.20
Price increase similar to current rate 17.3 0.74 14.9 0.78 14.4 0.69 15.9 0.80 16.2 0.79
Price increase less than current rate 4.0 0.40 3.9 0.39 4.6 0.43 4.4 0.50 4.8 0.49
No changes in prices 22.0 0.95 29.9 1.03 29.1 0.91 25.9 1.01 24.6 1.02
Decline in prices 8.3 0.54 23.2 0.95 19.1 0.78 13.4 0.84 9.3 0.66
Cost of Services                    
Prices will increase 72.5 0.98 70.1 1.06 70.3 0.91 70.4 1.02 68.8 1.06
Price increase more than current rate 46.4 1.13 43.3 1.11 45.5 1.01 44.8 1.10 45.7 1.15
Price increase similar to current rate 21.1 0.81 21.2 0.92 19.1 0.79 20.3 0.88 18.5 0.81
Price increase less than current rate 4.9 0.43 5.6 0.49 5.7 0.47 5.3 0.50 4.6 0.50
No changes in prices 23.4 0.90 25.7 0.99 25.8 0.88 25.2 0.98 27.4 1.02
Decline in prices 4.1 0.38 4.2 0.52 3.9 0.38 4.4 0.44 3.8 0.47
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 Jan-20 Jul-20 Sep-20 Nov-20 Jan-21
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 88.1 0.74 84.6 0.87 84.8 0.73 86.5 0.77 88.0 0.80
Price increase more than current rate 63.6 1.13 55.9 1.12 59.6 1.00 59.5 1.09 62.9 1.23
Price increase similar to current rate 21.4 0.88 24.3 0.93 20.4 0.82 22.9 0.92 21.2 0.95
Price increase less than current rate 3.2 0.37 4.4 0.46 4.7 0.43 4.1 0.44 3.9 0.43
No changes in prices 9.5 0.67 12.9 0.82 12.1 0.67 10.3 0.69 9.6 0.75
Decline in prices 2.4 0.30 2.5 0.35 3.1 0.35 3.2 0.39 2.4 0.33
Food Product                    
Prices will increase 84.8 0.73 75.3 1.00 77.3 0.85 77.7 0.97 80.5 0.96
Price increase more than current rate 56.0 1.14 45.2 1.10 48.3 0.99 48.4 1.10 53.0 1.21
Price increase similar to current rate 24.3 0.93 24.1 0.96 22.5 0.82 24.0 0.93 22.6 0.96
Price increase less than current rate 4.5 0.40 6.0 0.50 6.4 0.51 5.4 0.48 4.9 0.49
No changes in prices 9.8 0.59 17.4 0.88 14.8 0.72 14.3 0.82 13.4 0.84
Decline in prices 5.4 0.42 7.3 0.63 7.9 0.55 8.0 0.58 6.1 0.55
Non- Food Product                    
Prices will increase 81.6 0.80 74.3 1.04 75.7 0.87 75.0 0.98 80.4 0.93
Price increase more than current rate 53.1 1.14 44.0 1.13 47.3 1.00 45.6 1.13 52.8 1.22
Price increase similar to current rate 23.5 0.88 24.3 0.92 22.2 0.83 23.5 0.93 22.7 0.93
Price increase less than current rate 5.1 0.44 6.0 0.50 6.1 0.49 5.9 0.55 4.9 0.45
No changes in prices 14.1 0.72 18.7 0.97 18.2 0.78 19.3 0.89 15.0 0.84
Decline in prices 4.3 0.39 7.0 0.71 6.1 0.49 5.8 0.51 4.6 0.46
Household Durables                    
Prices will increase 68.0 0.96 62.4 1.14 62.3 0.98 65.0 1.08 69.8 1.07
Price increase more than current rate 44.0 1.10 35.6 1.08 38.8 0.98 39.9 1.08 45.0 1.20
Price increase similar to current rate 20.0 0.80 21.1 0.91 18.4 0.77 19.7 0.88 19.9 0.81
Price increase less than current rate 4.0 0.40 5.8 0.51 5.1 0.45 5.4 0.54 4.9 0.48
No changes in prices 21.2 0.84 26.0 1.01 26.5 0.88 24.6 1.01 22.1 0.97
Decline in prices 10.7 0.60 11.6 0.81 11.2 0.64 10.3 0.68 8.1 0.63
Cost of Housing                    
Prices will increase 77.8 0.89 57.4 1.10 63.9 0.95 72.1 1.01 74.8 1.05
Price increase more than current rate 54.7 1.09 34.7 1.10 42.0 0.99 47.8 1.10 49.9 1.22
Price increase similar to current rate 19.0 0.83 18.4 0.88 17.4 0.75 19.8 0.87 20.2 0.91
Price increase less than current rate 4.1 0.39 4.3 0.43 4.6 0.43 4.5 0.44 4.7 0.48
No changes in prices 15.0 0.77 26.1 1.01 23.8 0.85 19.2 0.86 17.7 0.95
Decline in prices 7.2 0.50 16.5 0.83 12.2 0.67 8.7 0.65 7.5 0.61
Cost of Services                    
Prices will increase 82.5 0.79 75.6 1.06 76.8 0.86 77.2 0.98 78.5 0.98
Price increase more than current rate 54.6 1.15 46.1 1.11 48.5 1.01 49.0 1.11 51.1 1.21
Price increase similar to current rate 23.0 0.87 23.7 0.90 22.0 0.83 22.2 0.87 22.9 0.96
Price increase less than current rate 4.9 0.44 5.8 0.50 6.3 0.50 6.1 0.55 4.6 0.45
No changes in prices 14.6 0.72 20.5 0.97 19.6 0.81 18.6 0.91 18.2 0.94
Decline in prices 2.9 0.33 3.9 0.57 3.6 0.37 4.2 0.45 3.3 0.41
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: January 2021
  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 0.12 8.2 0.17 10.0 0.12 9.3 0.29 9.7 0.13 10.1 0.15
Gender-wise                        
Male 9.3 0.14 8.4 0.18 10.1 0.14 9.5 0.34 9.8 0.16 10.1 0.15
Female 8.7 0.14 7.7 0.21 9.7 0.15 8.9 0.24 9.5 0.17 9.7 0.39
Category-wise                        
Financial Sector Employees 9.0 0.63 7.9 0.78 9.5 0.59 8.8 0.78 8.8 0.53 8.5 0.82
Other Employees 8.8 0.19 7.7 0.25 9.7 0.19 8.8 0.24 9.4 0.22 9.4 0.40
Self Employed 9.5 0.19 8.8 0.38 10.0 0.19 9.4 0.46 9.7 0.23 10.1 0.33
Homemaker 8.6 0.17 7.7 0.23 9.6 0.17 8.8 0.23 9.2 0.20 9.2 0.36
Retired Persons 10.3 0.36 10.3 0.22 11.0 0.36 10.8 0.53 10.3 0.38 10.5 0.51
Daily Workers 9.2 0.26 8.4 0.33 10.1 0.25 9.6 0.45 9.9 0.31 10.1 0.35
Other category 8.8 0.23 7.9 0.40 9.6 0.23 9.0 0.36 9.7 0.26 9.8 0.42
Age Group-wise                        
Up to 25 years 8.3 0.20 7.4 0.28 9.3 0.20 8.6 0.25 9.4 0.22 9.5 0.48
25 to 30 years 8.9 0.20 8.0 0.24 9.8 0.20 9.0 0.29 9.4 0.23 9.6 0.44
30 to 35 years 8.8 0.20 7.9 0.29 9.6 0.20 8.9 0.31 9.5 0.23 9.7 0.42
35 to 40 years 9.1 0.20 8.3 0.25 9.9 0.20 9.2 0.38 9.7 0.23 9.8 0.34
40 to 45 years 9.4 0.23 8.3 0.33 10.3 0.22 9.9 0.38 9.7 0.26 9.7 0.43
45 to 50 years 9.5 0.25 9.2 0.55 10.3 0.25 10.1 0.29 9.8 0.32 10.2 0.21
50 to 55 years 9.6 0.30 9.5 0.61 10.2 0.29 10.0 0.43 9.4 0.36 10.1 0.41
55 to 60 years 9.8 0.32 9.7 0.50 10.6 0.32 10.4 0.28 10.0 0.40 10.6 0.28
60 years and above 10.3 0.29 10.1 0.37 10.9 0.28 10.5 0.24 10.1 0.34 10.2 0.30
City-wise                        
Ahmedabad 10.3 0.44 10.0 0.44 11.6 0.42 11.6 1.19 11.7 0.37 12.5 1.59
Bengaluru 7.9 0.35 5.9 0.26 9.2 0.31 8.2 0.37 10.1 0.28 10.4 0.17
Bhopal 8.2 1.04 6.6 1.43 8.9 0.94 7.7 1.19 8.0 0.85 7.1 1.09
Bhubaneswar 10.3 1.05 10.2 1.77 11.8 1.07 13.6 2.21 10.4 1.29 12.1 2.00
Chennai 10.0 0.46 10.2 0.35 11.2 0.46 11.2 0.97 11.5 0.53 12.8 1.43
Delhi 8.8 0.32 8.0 0.44 9.6 0.33 8.7 0.45 9.1 0.37 8.8 0.40
Guwahati 11.9 0.73 12.5 2.25 12.3 0.75 13.4 2.19 11.4 0.74 12.7 1.96
Hyderabad 9.7 0.50 9.1 0.94 10.9 0.48 10.6 0.57 10.5 0.58 11.1 0.59
Jaipur 9.7 0.90 8.8 1.38 9.2 0.66 9.0 0.98 8.8 0.66 9.0 1.02
Kolkata 10.1 0.37 9.5 0.60 10.9 0.34 10.4 0.33 10.8 0.35 10.7 0.58
Lucknow 8.8 0.57 8.1 0.68 9.4 0.58 8.8 0.70 9.2 0.69 9.3 0.84
Mumbai 8.9 0.30 8.1 0.31 9.4 0.30 8.6 0.33 8.0 0.37 7.9 0.45
Nagpur 8.5 0.42 7.5 0.49 10.0 0.49 8.8 0.51 10.0 0.49 10.1 0.38
Patna 7.0 0.32 6.5 0.50 7.7 0.37 7.2 0.50 7.2 0.42 7.2 0.46
Thiruvananthapuram 5.6 0.60 5.1 0.43 6.9 0.65 6.1 0.48 8.2 0.85 8.5 1.45
Chandigarh 9.5 0.60 9.9 0.55 9.4 0.68 9.6 0.75 9.2 0.72 9.5 0.95
Ranchi 7.6 0.40 7.3 0.60 8.0 0.43 7.7 0.62 7.7 0.91 8.3 0.66
Raipur 6.5 0.41 5.7 0.21 8.0 0.44 7.5 0.46 10.2 0.98 10.2 0.91
Note: The table provides estimates and standard errors for quantitative responses.

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
Jan-20 8.7 0.11 7.6 0.19 9.5 0.11 8.6 0.16 9.3 0.13 9.2 0.25
Jul-20 10.0 0.11 9.9 0.21 10.8 0.11 10.5 0.06 9.8 0.14 10.3 0.08
Sep-20 9.9 0.10 9.8 0.25 10.8 0.10 10.4 0.07 9.9 0.12 10.3 0.08
Nov-20 9.5 0.11 8.8 0.18 10.4 0.11 10.1 0.09 9.8 0.13 10.1 0.11
Jan-21 9.1 0.12 8.2 0.17 10.0 0.12 9.3 0.29 9.7 0.13 10.1 0.15
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
Jan-20 66.1 66.2 53.4 59.3 64.5
Jul-20 62.8 61.0 49.9 43.6 58.4
Sep-20 62.1 61.0 50.4 45.9 60.5
Nov-20 62.7 63.5 52.4 54.0 60.7
Jan-21 63.3 64.3 54.5 55.7 62.8
One Year Ahead
Jan-20 72.2 70.9 60.3 67.8 72.8
Jul-20 63.9 64.5 55.2 51.2 65.7
Sep-20 63.0 64.8 55.5 53.6 66.6
Nov-20 66.4 65.9 56.7 62.1 68.9
Jan-21 68.4 68.6 60.6 63.0 69.0
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: January 2021
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 19 4 1 1 2 0 0 0 0 0 0 0 0 0 0 0 0 0 27
1-<2 0 23 12 7 1 0 1 1 0 0 1 0 0 0 0 0 0 0 46
2-<3 3 9 92 62 35 12 2 2 1 0 1 0 0 0 0 0 0 2 221
3-<4 0 2 7 89 69 45 16 5 2 1 1 0 0 0 0 0 0 1 238
4-<5 1 0 5 13 142 74 76 19 8 1 4 0 3 0 0 0 0 1 347
5-<6 0 1 13 31 21 450 174 241 102 12 112 5 3 1 0 11 2 1 1180
6-<7 0 0 1 7 4 7 183 63 64 17 20 0 3 1 0 0 2 0 372
7-<8 1 1 0 3 2 7 14 176 98 49 66 2 3 2 0 1 1 2 428
8-<9 0 0 1 2 3 6 8 6 247 67 120 11 11 3 4 2 4 2 497
9-<10 0 0 0 0 1 0 2 1 2 91 41 18 13 5 8 7 1 1 191
10-<11 0 0 1 1 3 41 3 10 27 9 403 45 162 53 12 180 87 1 1038
11-<12 0 0 0 0 0 0 1 0 1 0 0 11 9 3 0 2 1 0 28
12-<13 0 1 0 0 0 0 2 1 2 0 2 0 23 3 13 15 8 0 70
13-<14 0 0 0 0 0 0 0 0 0 0 0 0 0 7 2 7 4 0 20
14-<15 0 0 0 0 0 0 0 0 0 0 0 0 1 0 9 4 5 0 19
15-<16 0 0 0 0 0 7 0 3 3 0 14 0 4 2 1 75 111 1 221
>=16 1 0 1 1 3 10 2 0 1 0 25 0 4 2 1 18 924 4 997
Total 25 41 134 217 286 659 484 528 558 247 810 92 239 82 50 322 1150 16 5940
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: January 2021
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 17 1 2 3 2 0 1 0 0 0 1 0 0 0 0 0 0 0 27
1-<2 7 10 12 5 5 3 2 0 0 0 1 0 0 0 0 1 0 0 46
2-<3 30 1 67 30 45 28 3 5 3 0 3 0 0 0 0 3 0 3 221
3-<4 32 1 4 60 30 45 27 13 5 6 8 2 2 0 1 0 2 0 238
4-<5 37 1 4 5 71 67 75 32 24 10 12 2 1 0 3 1 2 0 347
5-<6 151 0 3 7 19 271 85 215 132 27 175 13 17 5 2 45 12 1 1180
6-<7 40 0 0 0 4 4 111 33 77 24 54 2 14 2 1 4 2 0 372
7-<8 54 0 0 1 1 4 4 103 59 72 81 10 20 5 3 8 2 1 428
8-<9 73 1 1 0 4 3 6 6 139 38 135 18 38 9 6 12 7 1 497
9-<10 29 0 0 0 0 0 0 0 1 43 40 24 21 7 8 14 4 0 191
10-<11 109 0 0 1 0 18 2 9 14 8 276 24 117 46 21 205 186 2 1038
11-<12 3 0 0 0 0 1 0 0 0 0 0 10 2 6 3 2 1 0 28
12-<13 4 0 0 0 0 0 1 1 0 0 1 0 15 5 13 14 16 0 70
13-<14 1 0 0 0 0 0 0 0 0 0 0 0 0 3 3 7 5 1 20
14-<15 2 0 0 0 0 0 0 1 0 0 0 0 0 0 4 2 10 0 19
15-<16 22 0 0 0 0 2 0 1 1 0 6 0 3 3 2 51 130 0 221
>=16 106 0 0 1 1 2 0 0 0 0 18 0 5 3 1 19 839 2 997
Total 717 15 93 113 182 448 317 419 455 228 811 105 255 94 71 388 1218 11 5940
Note: Figures are based on sample observations

1 The survey 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.

2 Unit-level data for previous rounds of the survey are available on the Database on Indian Economy (DBIE) portal of the Bank (weblink: https://dbie.rbi.org.in/DBIE/dbie.rbi?site=unitLevelData).


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