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Date : Oct 04, 2016
RBI’s Households’ Inflation Expectations - September 2016

Households’ Inflation Expectations continued to rise in September 2016

Households’ inflation expectations for three-month as well as one-year ahead period continued to be on the rise in September 2016 as per the Inflation Expectations Survey of Households conducted by the Reserve Bank of India (RBI) in September 2016 (45th round). Conducted at regular intervals, the Household Inflation Expectations Survey of the Reserve Bank provides useful directional information on near-term inflationary pressures and supplements other economic indicators. These expectations are formed by individuals based on their consumption basket and should not be treated as benchmark for official measure of inflation. The September 2016 round of the survey was conducted across 18 cities and covered about 5,300 urban households from various categories (Table 1).

Highlights:

I. The proportion of respondents expecting general prices to rise by ‘more than current rate’ in three months and one year ahead increased in September 2016 round. Similar sentiments prevailed across the selected product groups also (Table 2).

II. Three-month ahead median inflation rate increased marginally from 9.2 per cent to 9.5 per cent. However, one-year ahead median inflation rate increased sharply from 9.6 per cent to 11.4 per cent between June 2016 and September 2016 rounds (Table 4 and Chart-1).


Table 1: Respondents’ Profile (Category): Share in Total Sample
Category of Respondents Share in Total (%) Target Share (%)
Financial Sector Employees 9.7 10.0
Other Employees 15.7 15.0
Self-employed 19.4 20.0
Housewives 29.8 30.0
Retired Persons 9.7 10.0
Daily Workers 9.8 10.0
Others 6.0 5.0
Note: The above sample proportion is for September 2016 round

Table 2: Product-wise Expectations of Prices for Three-Month and One-Year Ahead
(Percentage of respondents)
Round No./survey period 41 42 43 44 45 41 42 43 44 45
(Round ended) → Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
Options: General Three-Month Ahead One-Year Ahead
Prices will increase 82.8 86.7 79.7 85.2 78.6 90.6 90.9 89.5 90.4 86.2
Price increase more than current rate 36.3 35.7 31.4 37.7 47.0 43.6 41.6 37.4 44.8 55.0
Price increase similar to current rate 21.2 29.5 26.4 28.7 18.5 23.8 28.5 31.6 27.6 20.4
Price increase less than current rate 25.4 21.5 21.9 18.8 13.0 23.2 20.9 20.6 18.0 10.8
No change in prices 12.3 9.0 16.6 11.4 15.7 5.5 5.6 7.5 6.3 9.2
Decline in price 4.8 4.3 3.7 3.4 5.8 3.9 3.5 2.9 3.4 4.6
Options: Food Product Three-Month Ahead One-Year Ahead
Prices will increase 84.1 85.9 81.1 86.5 74.7 89.6 90.6 88.3 90.1 83.1
Price increase more than current rate 37.5 34.9 30.3 38.3 42.8 42.8 41.2 34.7 44.7 51.1
Price increase similar to current rate 23.2 30.1 29.0 29.3 19.3 24.2 29.2 32.8 28.4 20.5
Price increase less than current rate 23.3 20.9 21.8 18.9 12.6 22.6 20.2 20.9 17.1 11.5
No change in prices 10.4 8.8 14.3 9.1 16.6 6.1 5.6 8.5 5.5 10.8
Decline in price 5.5 5.3 4.6 4.4 8.6 4.3 3.9 3.2 4.3 6.1
Options: Non-Food Product Three-Month Ahead One-Year Ahead
Prices will increase 73.5 74.3 70.8 72.7 63.2 82.8 81.9 81.4 82.5 72.1
Price increase more than current rate 26.8 23.7 23.4 27.7 35.2 32.1 29.2 26.6 33.6 42.8
Price increase similar to current rate 23.2 29.1 26.6 26.3 16.7 24.4 29.6 32.1 29.2 18.3
Price increase less than current rate 23.5 21.5 20.8 18.6 11.3 26.3 23.1 22.7 19.7 11.0
No change in prices 21.4 20.8 24.6 23.0 29.3 12.8 13.8 14.9 13.8 20.5
Decline in price 5.2 5.0 4.6 4.4 7.6 4.4 4.3 3.7 3.7 7.4
Options: Household Durables Three-Month Ahead One-Year Ahead
Prices will increase 65.7 68.6 70.9 66.6 54.1 78.4 78.9 80.0 79.9 68.1
Price increase more than current rate 24.6 22.1 22.5 26.3 30.3 32.0 29.2 28.7 34.1 39.6
Price increase similar to current rate 19.1 26.3 27.0 23.4 13.9 22.8 29.4 30.2 27.3 17.8
Price increase less than current rate 22.1 20.2 21.4 16.9 9.9 23.6 20.3 21.1 18.6 10.8
No change in prices 25.0 22.5 20.5 25.7 32.3 14.7 14.0 13.7 14.2 21.8
Decline in price 9.2 8.8 8.6 7.8 13.6 7.0 7.2 6.3 5.9 10.1
Options: Housing Prices Three-Month Ahead One-Year Ahead
Prices will increase 79.8 80.2 78.3 77.3 68.7 89.4 88.4 86.0 86.6 79.1
Price increase more than current rate 42.2 39.9 40.7 43.8 44.4 52.4 48.7 47.8 52.2 54.8
Price increase similar to current rate 20.3 25.1 22.7 20.6 15.2 19.2 24.9 24.2 21.8 15.7
Price increase less than current rate 17.4 15.3 15.0 12.9 9.1 17.9 14.8 14.0 12.5 8.5
No change in prices 14.2 13.3 14.8 16.2 22.3 6.2 6.9 8.1 8.5 13.0
Decline in price 6.0 6.5 6.8 6.6 9.1 4.3 4.7 6.0 4.9 7.9
Options: Cost of Services Three-Month Ahead One-Year Ahead
Prices will increase 74.2 81.6 76.1 78.4 64.5 87.0 90.4 87.0 88.8 81.9
Price increase more than current rate 31.5 35.9 29.6 33.7 36.9 40.3 42.0 37.4 42.8 49.3
Price increase similar to current rate 20.5 27.2 26.8 26.9 17.6 22.1 28.6 29.5 28.5 21.3
Price increase less than current rate 22.2 18.5 19.7 17.9 10.0 24.6 19.9 20.1 17.5 11.4
No change in prices 22.4 15.4 20.2 19.0 30.3 9.8 7.0 10.0 8.5 13.6
Decline in price 3.5 3.0 3.7 2.6 5.2 3.3 2.6 3.1 2.8 4.5

Table 3: Households Expecting General Price Movements in Coherence with Movements in Price Expectations of Various Product Groups: Three-Month and One-Year Ahead
(Percentage of respondents)
Round No. Survey period ended Food Non-Food Households durables Housing Cost of services
Three-months Ahead
41 Sep-15 70.0 58.1 50.6 54.0 56.1
42 Dec-15 73.2 59.4 51.4 54.4 60.9
43 Mar-16 69.6 63.2 59.1 58.7 64.6
44 Jun-16 69.8 60.0 54.5 55.7 59.2
45 Sep-16 62.6 52.2 46.2 50.1 49.3
One-year Ahead
41 Sep-15 70.3 59.5 55.4 60.8 60.6
42 Dec-15 77.8 63.9 60.2 61.6 67.2
43 Mar-16 73.1 67.4 66.6 63.9 69.2
44 Jun-16 74.7 64.5 60.6 61.5 65.9
45 Sep-16 67.9 56.5 52.5 57.1 58.4

Table 4: Household Inflation Expectations – Current, Three-Month and One-Year Ahead
Survey Round Survey period Ended Inflation rate in Per cent
Current Three-month Ahead One-year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
41 Sep-15 10.4 9.8 4.3 10.6 10.4 4.3 11.2 11.1 4.5
42 Dec-15 10.5 9.9 4.2 10.5 9.9 4.1 10.7 10.0 4.3
43 Mar-16 8.9 7.9 4.4 8.8 8.1 4.6 9.7 9.4 4.6
44 Jun-16 8.8 8.0 4.4 9.7 9.2 4.4 10.0 9.6 4.7
45 Sep-16 9.2 8.7 4.0 9.7 9.5 4.4 11.6 11.4 3.9

Table 5: Factors that Explain the Total Variability
Round No. Survey period ended Current Three-month Ahead One-year Ahead
41 Sep-15 City, Age-Group, Gender City, Age-Group, Gender City, Age-Group, Gender
42 Dec-15 City, Age-Group City, Age-Group City, Age-Group
43 Mar-16 City, Age-Group City City, Category
44 Jun-16 City, Age-Group, Category City, Category City, Category
45 Sep-16 City, Age-Group City, Age-Group City

Table 6 : Various Group-wise Inflation Expectations: September 2016
  Current Three-month Ahead One-year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
Overall 9.2 8.7 4.0 9.7 9.5 4.4 11.6 11.4 3.9
Gender-wise
Male 9.2 8.6 4.0 9.7 9.5 4.4 11.5 11.3 4.0
Female 9.3 8.8 4.1 9.8 9.6 4.5 11.8 11.5 3.9
Category-wise
Financial Sector Employees 9.1 8.2 4.0 9.4 8.9 4.3 11.3 10.9 4.0
Other Employees 9.0 8.4 3.9 9.6 9.4 4.4 11.6 11.5 3.9
Self Employed 9.3 8.7 4.2 9.7 9.6 4.5 11.5 11.2 4.0
Housewives 9.3 8.9 4.0 9.9 9.8 4.4 11.7 11.4 3.9
Retired Persons 9.7 8.9 4.3 10.0 10.0 4.5 11.8 11.8 4.1
Daily Workers 9.3 9.1 4.0 9.5 9.5 4.6 11.8 11.9 4.0
Other category 8.6 8.1 3.5 9.4 9.3 4.0 11.5 11.3 3.8
Age Group-wise
Up to 25 years 8.6 8.1 3.6 9.4 9.1 4.2 11.4 11.2 3.7
25 to 30 years 8.9 8.4 4.0 9.4 9.2 4.4 11.4 10.9 3.9
30 to 35 years 9.0 8.5 3.9 9.7 9.4 4.4 11.6 11.3 3.9
35 to 40 years 9.3 8.8 4.0 9.8 9.8 4.4 11.6 11.5 4.0
40 to 45 years 9.7 9.9 4.2 10.3 10.3 4.5 11.9 11.9 4.1
45 to 50 years 9.4 8.9 4.2 9.4 9.1 4.6 11.8 11.6 4.0
50 to 55 years 9.9 9.3 4.4 10.1 10.1 4.6 11.7 11.5 4.1
55 to 60 years 9.9 9.9 4.2 10.0 10.1 4.6 12.2 12.3 3.9
60 years and above 10.0 10.1 4.3 10.2 10.3 4.6 11.9 11.8 4.2
City-wise
Ahmadabad 13.2 15.6 4.0 13.9 16.1 3.8 15.0 16.3 3.0
Bengaluru 7.2 6.8 2.0 6.2 6.6 2.9 8.4 7.9 2.6
Bhopal 8.7 8.9 4.0 9.6 9.5 4.6 11.5 11.4 4.0
Bhubaneswar 13.2 15.6 3.9 14.5 16.2 3.4 14.9 16.3 3.3
Chennai 9.2 8.5 4.4 9.6 8.6 4.9 13.2 15.2 3.7
Delhi 8.8 7.7 3.7 10.2 9.7 3.8 11.1 10.7 3.8
Guwahati 12.3 15.4 5.6 13.0 15.7 5.2 14.6 16.3 3.9
Hyderabad 7.2 6.7 2.7 6.7 6.4 3.5 9.1 9.3 2.9
Jaipur 10.0 10.3 3.5 10.3 10.6 4.0 11.9 12.1 3.8
Kolkata 9.6 9.8 3.9 10.4 10.3 4.1 12.2 12.2 3.7
Lucknow 8.4 7.3 4.3 6.6 5.4 4.4 10.1 10.0 4.7
Mumbai 7.6 7.2 3.3 8.7 8.4 3.2 10.3 10.3 3.5
Nagpur 8.2 8.2 3.1 8.1 8.2 4.1 10.2 10.3 3.6
Patna 9.5 9.0 1.7 10.6 10.3 1.9 12.0 11.9 2.0
Thiruvananthapuram 11.2 10.7 4.8 9.5 10.1 5.2 12.6 14.9 4.3
Chandigarh 9.0 8.3 3.0 10.4 9.7 3.3 12.2 12.3 3.0
Ranchi 9.2 9.1 2.1 10.3 10.2 2.2 11.6 11.4 2.5
Raipur 6.3 5.7 2.6 6.3 5.9 3.2 8.6 8.3 3.2

Table 7: Cross-tabulation of Current and Three-month Ahead Inflation Expectations: September 2016
(Number of respondents)
  Three-month 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 3   2 2 1       2   2   1 2 11   41
1-2 4 8 7 8 2 1                   1     31
2-3 3 5 24 29 24 12 2 4                     103
3-4 4 2 20 31 46 42 13 3 2 1 1   1         2 168
4-5 5 6 16 9 39 57 71 23 8 4 1   5     1 1 4 250
5-6 8 13 63 36 20 99 132 223 73 14 51 3 4     11 3 15 768
6-7 3 4 22 13 12 10 72 110 89 27 23 4 2   1 1   5 398
7-8 4 7 28 17 5 10 20 85 175 96 72 4 6 2 1 2 2 4 540
8-9 3 9 32 11 6 5 5 15 63 190 119 19 22 4 4 1 1 4 513
9-10 1 2 15 9 2   1 4 4 27 88 28 33 3 5 4 6 3 235
10-11 7 2 40 56 21 66 5 9 15 9 158 168 197 79 16 124 67 28 1067
11-12 1   1     2   2 2 3 9 10 35 4 4 6 10   89
12-13 1   1 3   1         5 1 30 25 16 14 6   103
13-14         1           1     2 16 10 6   36
14-15 1         1 1       2     2   15 12 1 35
15-16 1   3 3   4 1 2 1 2 12 1 6 1 5 86 129 7 264
>=16 5 2 3 3 2 25 3 4 1 4 42 3 4 1 6 13 514 24 659
Total 65 61 278 228 182 337 327 484 433 377 586 241 347 123 75 291 768 97 5300

Table 8: Cross-tabulation of Current and One-year Ahead Inflation Expectations: September 2016
(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 5 2 1 2   1 1 1     3   1 1   3 12 8 41
1-2 5 3 5 3 2 5 1 1   2 1   1     2     31
2-3   13 5 16 17 20 11 2 3   9   3     2 1 1 103
3-4     16 9 20 36 24 15 11 10 16   2 3   3 1 2 168
4-5     1 29 14 46 44 23 35 17 22 3 7   1 2 4 2 250
5-6 1   7 4 63 29 141 94 85 54 169 14 18 5 9 38 16 21 768
6-7     1 2 1 34 17 101 50 43 70 19 22 4 2 16 5 11 398
7-8     1   2 7 39 25 99 69 134 56 46 11 12 13 20 6 540
8-9           2 1 28 18 69 172 61 64 16 14 34 20 14 513
9-10               1 17 5 59 40 46 15 12 20 15 5 235
10-11   2 2     8 2 3 3 72 44 195 151 58 66 216 203 42 1067
11-12 2           1       2 8 15 21 7 15 18   89
12-13           1         3 6 5 20 18 27 17 6 103
13-14                         1   7 16 12   36
14-15       1                   1 3 16 10 4 35
15-16 1       1     2 1   2       17 13 217 10 264
>=16 1   2 1   2 2     1 2 1 1     5 607 34 659
Total 15 20 41 67 120 191 284 296 322 342 708 403 383 155 168 441 1178 166 5300

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