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Date : Oct 06, 2023
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of September 2023 round of its bi-monthly inflation expectations survey of households (IESH)1 2. The survey was conducted during September 02-11, 2023 in 19 major cities, with responses from 6,066 urban households. Female respondents accounted for 50.4 per cent of this sample.

Highlights:

  1. Households’ perception of current inflation moderated by 50 basis points (bps) since July 2023 round of the survey to 8.4 per cent in September 2023 [Charts 1a and 1b; Table 3].

  2. Median inflation expectations of households declined by 90 bps and 40 bps for three months and one year ahead periods, respectively, to reach 9.1 per cent and 9.9 per cent; inflation expectations have reverted to single-digits for the first time since the onset of the Covid-19 pandemic [Charts 1a and 1b; Table 3].

  3. Households expect lower price and inflationary pressures for most of the product groups [Tables 1(a) and 1(b)].

  4. Inflation expectations of all major group of respondents, except the self-employed category, has moderated [Table 2].

  5. Three months ahead expectations on overall prices have highest coherence with respondents’ views on cost of services and non-food products, whereas one year ahead expectations are also more aligned with housing cost [Table 4].

Chart1a and 1b

Note: Please see the excel file for time series data.3

Table 1(a): Product-wise Expectations of Prices for Three Months ahead
(Percentage of Respondents)
Survey period ended Sep-22 Mar-23 May-23 Jul-23 Sep-23
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 85.0 0.77 83.8 0.83 81.2 0.82 80.8 0.86 74.2 0.97
Price increase more than current rate 59.9 1.14 60.6 1.17 59.7 1.08 55.3 1.20 49.5 1.10
Price increase similar to current rate 20.9 0.85 19.8 0.87 17.9 0.77 21.8 0.93 20.0 0.80
Price increase less than current rate 4.2 0.44 3.5 0.36 3.5 0.41 3.6 0.39 4.7 0.47
No changes in prices 12.6 0.70 13.3 0.74 15.7 0.77 16.1 0.79 20.7 0.88
Decline in prices 2.4 0.33 2.8 0.41 3.1 0.35 3.1 0.41 5.0 0.52
Food Product                    
Prices will increase 85.3 0.69 84.0 0.75 82.7 0.73 84.0 0.77 75.4 0.87
Price increase more than current rate 61.9 1.09 62.1 1.12 61.8 1.00 63.5 1.04 55.1 1.05
Price increase similar to current rate 17.4 0.75 16.9 0.79 16.2 0.71 15.5 0.72 15.1 0.71
Price increase less than current rate 6.1 0.49 5.1 0.42 4.7 0.42 5.0 0.44 5.3 0.46
No changes in prices 9.3 0.55 9.7 0.59 11.0 0.61 9.0 0.60 13.2 0.68
Decline in prices 5.4 0.45 6.3 0.53 6.3 0.48 7.0 0.54 11.3 0.66
Non- Food Product                    
Prices will increase 82.3 0.74 81.3 0.79 78.4 0.84 75.5 0.92 69.2 0.93
Price increase more than current rate 55.8 1.08 58.6 1.10 57.1 1.08 52.2 1.16 47.1 1.04
Price increase similar to current rate 20.5 0.79 17.7 0.80 16.6 0.70 18.4 0.80 16.7 0.72
Price increase less than current rate 6.0 0.48 5.1 0.43 4.6 0.43 4.9 0.43 5.4 0.51
No changes in prices 13.1 0.67 13.3 0.67 16.2 0.74 18.3 0.80 20.5 0.77
Decline in prices 4.6 0.42 5.4 0.51 5.4 0.45 6.2 0.54 10.3 0.66
Household Durables                    
Prices will increase 70.2 0.89 67.9 0.92 68.2 0.90 65.8 0.97 62.2 0.99
Price increase more than current rate 48.0 1.03 47.8 1.09 49.5 1.06 45.3 1.12 43.2 1.05
Price increase similar to current rate 16.8 0.70 15.8 0.75 14.8 0.67 15.8 0.75 14.1 0.65
Price increase less than current rate 5.3 0.45 4.2 0.41 3.9 0.38 4.6 0.41 4.9 0.43
No changes in prices 22.8 0.84 22.4 0.85 24.6 0.86 25.0 0.88 26.4 0.88
Decline in prices 7.1 0.50 9.7 0.60 7.2 0.51 9.2 0.60 11.3 0.64
Cost of Housing                    
Prices will increase 75.7 0.92 78.2 0.92 78.1 0.82 76.8 0.94 75.1 0.95
Price increase more than current rate 53.2 1.07 57.7 1.14 59.4 1.06 56.0 1.14 54.3 1.09
Price increase similar to current rate 17.7 0.70 16.7 0.76 15.1 0.74 17.0 0.75 16.3 0.66
Price increase less than current rate 4.8 0.42 3.8 0.39 3.7 0.35 3.7 0.35 4.5 0.43
No changes in prices 20.2 0.88 18.1 0.83 18.7 0.79 20.2 0.88 20.9 0.90
Decline in prices 4.1 0.39 3.7 0.44 3.2 0.36 3.0 0.37 4.1 0.46
Cost of Services                    
Prices will increase 72.2 0.91 73.2 0.90 70.6 0.89 67.7 0.97 63.0 1.04
Price increase more than current rate 49.4 1.10 51.7 1.11 51.3 1.00 47.3 1.13 44.7 1.05
Price increase similar to current rate 17.9 0.75 17.8 0.76 15.8 0.69 15.9 0.72 14.5 0.68
Price increase less than current rate 5.0 0.41 3.6 0.37 3.5 0.37 4.5 0.40 3.9 0.40
No changes in prices 24.7 0.87 23.2 0.86 26.2 0.87 28.2 0.90 31.2 0.99
Decline in prices 3.1 0.36 3.6 0.40 3.2 0.34 4.1 0.43 5.7 0.54
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 Sep-22 Mar-23 May-23 Jul-23 Sep-23
General Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE
Prices will increase 90.8 0.59 90.4 0.66 89.6 0.61 88.6 0.68 86.2 0.74
Price increase more than current rate 68.1 1.12 69.3 1.11 70.2 1.05 65.0 1.07 62.2 1.05
Price increase similar to current rate 19.3 0.88 18.1 0.87 16.7 0.77 20.5 0.86 19.9 0.81
Price increase less than current rate 3.5 0.38 3.0 0.33 2.7 0.32 3.1 0.33 4.1 0.43
No changes in prices 6.6 0.49 6.4 0.50 7.3 0.50 8.6 0.57 9.6 0.59
Decline in prices 2.5 0.34 3.2 0.43 3.1 0.35 2.8 0.35 4.2 0.48
Food Product                    
Prices will increase 86.4 0.67 86.3 0.71 86.9 0.66 84.7 0.75 82.8 0.80
Price increase more than current rate 60.5 1.09 63.7 1.16 64.6 0.99 60.6 1.11 57.9 1.09
Price increase similar to current rate 21.0 0.84 18.5 0.86 18.3 0.77 20.1 0.85 19.7 0.82
Price increase less than current rate 4.9 0.42 4.1 0.38 4.0 0.40 4.0 0.38 5.3 0.48
No changes in prices 8.3 0.52 8.1 0.53 8.0 0.51 9.3 0.59 9.6 0.58
Decline in prices 5.3 0.45 5.6 0.52 5.2 0.44 6.0 0.48 7.6 0.60
Non- Food Product                    
Prices will increase 86.0 0.69 85.4 0.73 84.1 0.72 81.6 0.85 78.9 0.83
Price increase more than current rate 59.8 1.09 62.9 1.12 62.0 1.05 57.1 1.16 54.7 1.05
Price increase similar to current rate 20.9 0.83 18.2 0.78 17.9 0.77 20.6 0.83 19.7 0.78
Price increase less than current rate 5.4 0.45 4.3 0.40 4.2 0.41 3.9 0.38 4.5 0.44
No changes in prices 9.5 0.56 9.4 0.55 11.1 0.61 13.5 0.72 13.9 0.66
Decline in prices 4.4 0.41 5.2 0.51 4.8 0.43 4.8 0.48 7.2 0.57
Household Durables                    
Prices will increase 77.7 0.79 76.5 0.85 76.9 0.83 75.8 0.88 73.9 0.91
Price increase more than current rate 54.1 1.06 55.8 1.15 57.0 1.07 53.2 1.10 52.4 1.04
Price increase similar to current rate 18.9 0.79 16.9 0.80 16.1 0.72 18.4 0.80 17.3 0.71
Price increase less than current rate 4.6 0.41 3.8 0.38 3.7 0.37 4.2 0.38 4.1 0.42
No changes in prices 16.4 0.70 15.4 0.70 16.7 0.71 17.7 0.76 18.5 0.76
Decline in prices 6.0 0.45 8.1 0.60 6.4 0.48 6.5 0.48 7.7 0.56
Cost of Housing                    
Prices will increase 85.8 0.67 87.4 0.65 87.9 0.63 86.8 0.69 86.1 0.70
Price increase more than current rate 61.8 1.04 66.6 1.06 67.4 1.00 64.6 1.05 65.0 1.04
Price increase similar to current rate 19.6 0.79 17.4 0.80 17.1 0.76 18.5 0.79 16.9 0.73
Price increase less than current rate 4.5 0.41 3.4 0.37 3.4 0.34 3.8 0.37 4.2 0.42
No changes in prices 10.6 0.58 9.2 0.54 9.1 0.54 10.4 0.60 10.1 0.56
Decline in prices 3.6 0.38 3.4 0.41 3.0 0.34 2.7 0.34 3.8 0.43
Cost of Services                    
Prices will increase 84.2 0.74 83.6 0.80 83.2 0.72 80.9 0.80 78.4 0.86
Price increase more than current rate 58.6 1.08 60.5 1.14 61.1 1.05 57.3 1.12 56.2 1.05
Price increase similar to current rate 21.0 0.81 18.8 0.83 18.2 0.81 19.6 0.83 18.0 0.70
Price increase less than current rate 4.6 0.43 4.3 0.39 3.9 0.36 4.0 0.39 4.2 0.43
No changes in prices 12.9 0.65 13.0 0.68 13.7 0.64 15.5 0.72 17.1 0.74
Decline in prices 2.9 0.37 3.4 0.44 3.1 0.34 3.5 0.37 4.4 0.48
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: Sep-23
  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 9.0 0.09 8.4 0.11 9.7 0.09 9.1 0.17 9.3 0.11 9.9 0.17
Gender-wise                        
Male 9.2 0.12 8.5 0.14 9.8 0.13 9.3 0.26 9.5 0.16 10.0 0.20
Female 8.7 0.12 8.2 0.14 9.5 0.12 8.9 0.15 9.2 0.15 9.7 0.26
Category-wise                        
Financial Sector Employees 8.4 0.44 7.5 0.46 9.2 0.50 8.4 0.67 8.8 0.56 8.2 0.62
Other Employees 9.1 0.17 8.4 0.17 9.9 0.17 9.4 0.31 9.7 0.22 10.0 0.28
Self Employed 9.5 0.20 9.4 0.38 10.1 0.21 9.9 0.30 9.4 0.27 10.1 0.24
Homemaker 8.8 0.14 8.3 0.16 9.5 0.14 9.0 0.21 9.2 0.18 9.8 0.28
Retired Persons 9.8 0.43 9.1 0.74 10.3 0.43 10.2 0.64 9.5 0.57 10.1 0.75
Daily Workers 8.9 0.25 8.4 0.33 9.5 0.26 9.0 0.44 9.1 0.31 9.5 0.47
Other category 8.7 0.21 7.9 0.20 9.5 0.23 8.7 0.25 9.4 0.27 9.4 0.40
Age Group-wise                        
Up to 25 years 8.4 0.17 7.8 0.18 9.2 0.17 8.7 0.18 9.2 0.22 9.4 0.31
25 to 30 years 8.9 0.19 8.4 0.20 9.6 0.20 9.1 0.27 9.5 0.24 10.0 0.30
30 to 35 years 8.8 0.19 8.2 0.21 9.6 0.19 8.8 0.22 9.3 0.24 10.0 0.24
35 to 40 years 8.9 0.18 8.2 0.22 9.6 0.19 8.9 0.27 9.2 0.24 9.6 0.35
40 to 45 years 9.5 0.22 9.3 0.47 10.1 0.23 10.0 0.29 9.7 0.30 10.3 0.18
45 to 50 years 9.3 0.24 8.5 0.32 9.9 0.24 9.5 0.44 8.9 0.30 8.9 0.50
50 to 55 years 9.3 0.26 8.9 0.40 10.0 0.27 9.3 0.43 9.0 0.35 9.5 0.51
55 to 60 years 9.5 0.31 9.3 0.67 10.1 0.32 9.5 0.52 8.5 0.42 8.5 0.79
60 years and above 9.3 0.32 8.5 0.43 9.8 0.31 9.4 0.55 9.4 0.37 9.9 0.44
City-wise                        
Ahmedabad 8.0 0.24 7.5 0.20 8.6 0.26 8.2 0.33 8.0 0.37 8.3 0.32
Bengaluru 7.6 0.26 6.1 0.33 8.8 0.27 7.7 0.31 9.3 0.34 9.1 0.59
Bhopal 6.5 0.49 5.6 0.14 7.5 0.55 6.1 0.49 7.3 0.59 6.2 0.66
Bhubaneswar 8.6 1.30 7.4 1.75 10.3 1.25 9.5 1.94 10.3 1.06 10.1 1.72
Chennai 8.5 0.26 7.8 0.67 9.2 0.27 8.7 0.61 9.6 0.32 9.9 0.54
Delhi 9.9 0.22 9.9 0.37 10.2 0.23 10.2 0.28 9.3 0.31 9.8 0.52
Guwahati 8.0 0.65 7.4 0.81 8.6 0.74 7.9 0.94 9.5 0.72 9.2 0.92
Hyderabad 8.4 0.35 7.9 0.40 9.2 0.33 8.7 0.31 9.3 0.35 10.1 0.29
Jaipur 8.4 0.46 8.2 0.43 8.7 0.42 8.5 0.33 7.8 0.57 8.2 0.69
Jammu 9.9 1.01 9.7 0.99 8.5 0.68 7.6 1.12 6.7 0.88 5.7 2.21
Kolkata 10.5 0.28 10.3 0.16 11.4 0.28 11.1 0.63 11.2 0.31 11.8 0.99
Lucknow 9.3 0.40 8.9 0.94 9.6 0.42 9.2 0.84 8.7 0.70 8.7 0.87
Mumbai 9.2 0.20 8.6 0.13 10.1 0.21 9.8 0.26 9.5 0.25 10.3 0.15
Nagpur 9.4 0.51 8.6 0.72 10.5 0.48 10.1 0.53 9.6 0.49 10.4 0.36
Patna 7.5 0.51 7.3 0.47 7.8 0.52 7.5 0.46 6.8 0.50 7.1 0.54
Thiruvananthapuram 6.6 0.59 5.6 0.18 8.0 0.62 7.2 0.42 9.1 0.61 8.6 0.73
Chandigarh 11.2 0.69 10.9 0.86 10.9 0.66 10.7 1.22 9.7 0.73 10.2 0.92
Ranchi 8.9 0.30 8.4 0.24 9.3 0.31 8.7 0.35 8.6 0.42 8.8 0.46
Raipur 9.4 0.47 9.1 0.88 10.2 0.46 10.0 0.62 10.5 0.75 11.0 0.61
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
Sep-22 10.4 0.10 10.2 0.05 11.3 0.10 10.8 0.09 11.1 0.12 11.0 0.23
Mar-23 9.5 0.10 8.9 0.17 10.5 0.10 10.2 0.08 10.4 0.11 10.5 0.07
May-23 9.3 0.09 8.8 0.13 10.3 0.10 10.1 0.08 10.2 0.11 10.4 0.08
Jul-23 9.3 0.09 8.9 0.14 10.2 0.09 10.0 0.15 10.0 0.11 10.3 0.07
Sep-23 9.0 0.09 8.4 0.11 9.7 0.09 9.1 0.17 9.3 0.11 9.9 0.17
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
Sep-22 67.1 66.9 61.1 62.0 66.6
Mar-23 67.4 68.8 60.9 65.9 68.0
May-23 67.4 68.6 63.4 67.1 69.1
Jul-23 63.1 65.5 60.9 64.5 65.7
Sep-23 62.0 64.3 60.7 63.2 66.3
One Year Ahead
Sep-22 73.8 74.3 67.7 71.7 74.6
Mar-23 75.7 75.7 69.6 74.9 75.7
May-23 75.6 75.3 70.7 76.1 76.4
Jul-23 73.4 73.0 66.9 73.4 73.6
Sep-23 69.8 71.2 66.8 72.2 71.5
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: Sep-23
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 14 1 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 17
1-<2 1 30 13 3 0 1 0 0 0 0 0 0 0 0 0 0 0 0 48
2-<3 3 26 107 48 31 21 1 0 1 0 1 0 0 0 0 0 0 0 239
3-<4 0 5 16 77 47 49 17 2 2 1 0 0 0 0 0 0 1 0 217
4-<5 0 0 5 13 114 65 53 9 5 0 1 0 0 0 0 0 0 0 265
5-<6 1 1 17 31 29 440 140 196 88 11 87 0 1 0 0 7 1 0 1050
6-<7 0 0 0 5 9 15 198 88 62 16 25 3 4 0 0 0 0 0 425
7-<8 0 0 1 3 3 22 9 252 142 56 59 3 7 0 1 0 1 0 559
8-<9 0 0 2 4 2 12 8 9 280 126 136 22 9 3 1 4 3 2 623
9-<10 0 0 0 0 1 2 1 7 6 101 69 18 12 5 4 5 3 0 234
10-<11 2 0 3 10 10 65 8 11 12 17 486 88 154 39 9 194 75 1 1184
11-<12 0 0 0 0 1 1 0 0 0 8 0 14 7 5 0 2 1 0 39
12-<13 0 0 0 0 1 0 1 1 0 2 11 1 49 9 13 20 5 0 113
13-<14 0 0 0 0 0 0 0 0 2 1 0 0 1 11 2 6 3 0 26
14-<15 0 0 0 0 0 0 0 0 0 1 0 0 0 0 5 5 11 0 22
15-<16 0 0 0 1 0 5 1 2 2 0 14 1 1 0 3 87 107 4 228
>=16 1 0 2 0 0 13 2 0 0 1 17 1 0 0 0 22 709 9 777
Total 22 63 167 195 248 711 439 577 602 341 907 151 245 72 38 352 920 16 6066
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: Sep-23
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 9 0 2 1 1 2 0 0 0 0 2 0 0 0 0 0 0 0 17
1-<2 9 9 18 8 1 1 0 1 0 0 1 0 0 0 0 0 0 0 48
2-<3 46 5 64 36 43 22 10 7 1 0 4 0 0 0 0 0 1 0 239
3-<4 23 3 4 40 28 59 27 9 12 3 7 0 1 0 0 0 1 0 217
4-<5 47 0 2 2 62 47 50 15 16 5 15 2 2 0 0 0 0 0 265
5-<6 139 1 3 11 12 222 105 160 112 42 195 6 11 0 0 24 7 0 1050
6-<7 59 0 0 3 3 9 97 75 78 18 61 9 7 0 0 5 1 0 425
7-<8 65 0 1 0 2 14 4 138 100 64 122 9 21 5 5 4 5 0 559
8-<9 80 0 0 0 2 4 10 3 119 87 188 37 49 10 7 17 10 0 623
9-<10 25 0 0 0 0 0 1 4 2 43 70 39 27 4 5 8 6 0 234
10-<11 171 0 0 1 0 9 2 5 10 10 270 56 163 49 26 251 158 3 1184
11-<12 6 0 0 0 0 1 0 0 0 8 1 2 9 3 3 5 1 0 39
12-<13 15 0 0 0 0 0 1 0 1 1 9 1 31 6 16 17 15 0 113
13-<14 3 0 0 0 0 0 0 0 1 0 0 0 1 10 1 6 4 0 26
14-<15 2 0 0 0 0 0 0 0 0 0 0 0 0 0 5 2 13 0 22
15-<16 25 0 0 0 0 1 0 0 1 0 6 0 1 0 2 55 134 3 228
>=16 119 0 0 0 0 2 0 0 0 0 3 0 0 0 0 10 634 9 777
Total 843 18 94 102 154 393 307 417 453 281 954 161 323 87 70 404 990 15 6066
Note: Figures are based on sample observations

1 The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank. Results of the previous survey round were released on the Bank’s website on August 10, 2023.

2 The survey is conducted at bi-monthly intervals by the Reserve Bank and 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. All estimates of inflation expectations are given in the form of medians, unless stated otherwise.

3 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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