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Date : Aug 01, 2018
Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the June 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 5,189 urban households covering various occupational categories (Table 1).

Highlights:

  1. The proportion of respondents expecting general prices to increase at more than the current rate in the next three months remained similar to that in the May 2018 round. One year ahead, however, this proportion declined marginally (Table 2).

  2. As regards product groups, the proportion of respondents expecting prices to rise faster than the current rate, witnessed a notable decline in case of household durables three months ahead and a year ahead.

  3. Both three months ahead and one year ahead median inflation expectations rose by 20 basis points (bps) than in the May 2018 round (Chart 1, Table 4).

  4. Three months ahead and one year ahead median inflation expectations increased by 140 and 150 bps, respectively, when compared with the June 2017 round.

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

Table 1: Respondents’ Profile (Category): Share in Total Sample - Jun 2018
Category of Respondents Share in Total (%) Target Share (%)
Financial Sector Employees 9.9 10.0
Other Employees 15.6 15.0
Self-employed 20.3 20.0
Homemakers 29.2 30.0
Retired Persons 9.5 10.0
Daily Workers 9.8 10.0
Others 5.7 5.0

Table 2: Product-wise Expectations of Prices for Three Months ahead and One Year ahead
(Percentage of Respondents)
Round Jun-17 Dec-17 Mar-18 May-18 Jun-18 Jun-17 Dec-17 Mar-18 May-18 Jun-18
Options: General Three Months Ahead One Year Ahead
Prices will increase 77.2 80.6 80.2 82.3 83.8 82.4 92.7 90.8 91.1 91.6
Price increase more than current rate 39.9 49.8 45.4 50.5 50.1 44.1 63.0 56.7 62.6 59.8
Price increase similar to current rate 26.6 24.6 27.2 25.1 26.4 28.3 23.9 28.0 23.4 25.8
Price increase less than current rate 10.7 6.2 7.5 6.7 7.3 10.1 5.8 6.2 5.0 6.0
No change in prices 16.8 17.4 17.8 16.0 14.6 11.2 5.3 7.1 6.5 6.5
Decline in prices 6.0 2.0 2.1 1.7 1.6 6.4 2.0 2.2 2.4 1.9
Options: Food Product Three Months Ahead One Year Ahead
Prices will increase 71.6 78.1 79.6 82.0 81.4 75.8 85.0 85.0 85.6 85.1
Price increase more than current rate 39.1 45.8 44.0 48.3 47.8 38.0 52.1 47.4 53.4 51.4
Price increase similar to current rate 21.8 23.4 24.9 24.5 24.8 26.8 24.9 28.9 25.2 26.5
Price increase less than current rate 10.7 8.9 10.7 9.3 8.7 11.0 8.1 8.7 7.0 7.1
No change in prices 14.2 15.5 15.4 13.5 13.3 12.4 10.4 10.2 9.4 9.7
Decline in prices 14.3 6.4 5.0 4.5 5.3 11.8 4.6 4.8 5.0 5.3
Options: Non-Food Product Three Months Ahead One Year Ahead
Prices will increase 72.1 73.3 75.0 78.4 78.2 74.8 80.5 80.0 82.7 83.3
Price increase more than current rate 36.9 41.2 39.6 45.8 44.5 36.3 48.8 44.2 51.1 49.1
Price increase similar to current rate 23.6 23.3 25.4 24.0 24.4 27.3 23.7 26.8 25.3 26.6
Price increase less than current rate 11.6 8.8 10.0 8.6 9.3 11.2 7.9 9.0 6.3 7.6
No change in prices 18.1 21.9 20.8 18.1 17.7 16.3 15.4 15.8 13.2 12.7
Decline in prices 9.8 4.8 4.2 3.6 4.1 9.0 4.2 4.3 4.1 4.0
Options: Household Durables Three Months Ahead One Year Ahead
Prices will increase 65.4 60.0 63.7 63.2 58.7 70.3 68.8 71.1 72.5 70.6
Price increase more than current rate 34.7 35.0 34.7 36.7 32.6 35.7 42.3 40.1 45.2 41.6
Price increase similar to current rate 20.6 18.6 20.7 19.9 19.1 24.3 19.8 23.4 21.5 21.8
Price increase less than current rate 10.1 6.4 8.3 6.6 7.1 10.3 6.7 7.7 5.8 7.2
No change in prices 20.6 28.8 26.2 26.8 30.9 17.5 21.7 19.9 19.2 21.2
Decline in prices 14.0 11.3 10.1 10.0 10.4 12.2 9.5 9.0 8.3 8.2
Options: Housing Prices Three Months Ahead One Year Ahead
Prices will increase 64.3 69.5 70.0 71.6 71.6 73.4 78.4 80.2 79.8 81.0
Price increase more than current rate 37.1 45.9 43.9 47.6 45.3 42.2 53.3 50.9 55.2 53.0
Price increase similar to current rate 18.6 18.0 18.8 18.2 19.9 22.4 19.2 22.5 19.6 21.5
Price increase less than current rate 8.7 5.6 7.3 5.8 6.4 8.8 5.9 6.8 5.0 6.5
No change in prices 22.0 21.0 22.4 20.8 20.7 15.1 14.0 13.9 13.9 13.3
Decline in prices 13.6 9.5 7.7 7.7 7.7 11.5 7.7 5.9 6.3 5.7
Options: Cost of Services Three Months Ahead One Year Ahead
Prices will increase 68.9 71.5 70.2 72.0 70.8 78.6 82.8 82.6 84.2 84.1
Price increase more than current rate 35.1 41.4 38.3 42.9 40.8 38.8 50.5 45.3 52.9 49.5
Price increase similar to current rate 23.7 23.2 23.5 22.6 22.8 27.8 24.3 28.6 24.4 26.6
Price increase less than current rate 10.2 6.8 8.3 6.6 7.3 12.0 8.0 8.7 6.9 8.0
No change in prices 25.3 25.6 26.6 25.6 26.5 15.6 14.2 14.9 13.5 13.7
Decline in prices 5.8 3.0 3.3 2.4 2.6 5.9 3.0 2.5 2.4 2.2
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)
Survey period ended Food Non-Food Households durables Housing Cost of services
Three Months Ahead
Jun-17 62.0 64.3 57.2 57.6 63.4
Dec-17 64.9 64.1 55.5 58.4 63.8
Mar-18 63.7 63.2 55.6 57.8 62.7
May-18 67.5 65.6 56.6 60.0 65.0
Jun-18 65.6 64.7 53.8 60.0 63.7
One Year Ahead
Jun-17 68.2 67.7 62.0 63.2 70.0
Dec-17 70.1 69.0 58.8 65.1 70.5
Mar-18 69.0 66.3 59.6 64.3 69.2
May-18 72.4 70.8 62.5 67.4 72.1
Jun-18 71.9 71.4 60.9 67.4 71.9

Table 4: Household Inflation Expectations – Current, Three Months and One Year Ahead
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.
Jun-17 7.3 6.4 3.8 8.1 7.5 3.9 9.1 8.6 4.1
Dec-17 7.9 6.7 4.2 8.4 7.5 4.3 8.9 8.5 4.8
Mar-18 8.2 7.2 4.0 8.6 7.8 4.1 8.9 8.6 4.7
May-18 8.7 7.9 4.3 9.4 8.7 4.4 9.7 9.9 5.1
Jun-18 8.9 8.1 4.4 9.5 8.9 4.4 9.8 10.1 5.0

Table 5: Factors that Explain the Total Variability
Survey Period Ended Current Three Months Ahead One Year Ahead
Jun-17 City, Age-Group, Category City, Age-Group, Category City, Age-Group, Category
Dec-17 City, Category, Age-Group, Gender City, Category, Age-Group City, Category
Mar-18 City, Age-Group, Gender City, Category, Age-Group, Gender City, Category
May-18 City, Category, Age-Group City, Category City, Gender, Category
Jun-18 City, Age-Group, Category City, Age-Group, Category City, Age-Group, Category

Table 6 : Various Group-wise Inflation Expectations: June 2018
  Current Three Months Ahead One Year Ahead
Mean Median Std. Dev. Mean Median Std. Dev. Mean Median Std. Dev.
Overall 8.9 8.1 4.4 9.5 8.9 4.4 9.8 10.1 5.0
Gender-wise
Male 9.0 8.2 4.4 9.5 8.9 4.5 9.8 10.0 5.1
Female 8.8 8.0 4.3 9.5 8.8 4.3 9.9 10.2 4.9
Category-wise
Financial Sector Employees 8.5 7.6 4.2 9.2 8.5 4.3 9.4 9.1 4.8
Other Employees 9.0 8.1 4.4 9.5 8.7 4.5 9.8 10.1 5.0
Self Employed 8.9 8.1 4.5 9.5 8.9 4.5 9.7 10.0 5.2
Homemakers 9.0 8.2 4.3 9.6 8.9 4.4 10.0 10.2 4.9
Retired Persons 9.2 8.5 4.4 9.9 9.4 4.6 10.2 10.3 5.0
Daily Workers 9.2 8.7 4.4 9.8 9.5 4.4 10.1 10.3 5.0
Other category 8.2 7.3 4.0 8.7 7.9 4.2 9.4 9.2 4.6
Age Group-wise
Up to 25 years 8.0 7.1 3.9 8.7 7.9 4.1 9.2 8.9 4.7
25 to 30 years 8.6 7.7 4.2 9.2 8.4 4.3 9.6 9.7 4.9
30 to 35 years 8.9 8.2 4.3 9.5 8.8 4.3 9.8 10.2 4.9
35 to 40 years 9.1 8.2 4.4 9.7 9.1 4.5 9.9 10.1 5.0
40 to 45 years 8.9 8.3 4.4 9.4 9.0 4.6 9.5 10.0 5.1
45 to 50 years 9.6 9.0 4.6 10.1 10.1 4.6 10.2 10.5 5.2
50 to 55 years 9.7 9.8 4.4 10.1 10.1 4.4 10.5 10.5 4.8
55 to 60 years 9.4 8.9 4.7 10.1 9.8 4.7 10.6 10.6 4.9
60 years and above 9.4 8.7 4.5 10.1 9.7 4.7 10.5 10.4 5.1
City-wise
Ahmedabad 10.3 10.1 4.2 11.3 10.7 4.2 11.3 10.8 4.4
Bengaluru 5.6 5.2 2.9 6.2 5.9 2.9 6.8 6.9 3.6
Bhopal 6.7 5.8 3.6 7.4 6.6 3.8 6.8 6.8 4.6
Bhubaneswar 8.3 7.3 3.6 9.8 8.9 3.4 11.7 10.8 3.2
Chennai 8.6 8.3 3.8 9.2 9.0 3.9 10.6 10.7 4.4
Delhi 8.8 8.4 4.1 9.3 8.9 4.3 9.8 9.5 4.6
Guwahati 10.4 10.5 5.3 9.9 10.1 5.3 9.2 9.0 5.8
Hyderabad 9.8 8.3 4.8 10.8 10.1 4.6 12.1 12.5 4.4
Jaipur 7.9 8.2 3.0 8.4 8.7 3.1 9.0 9.7 4.0
Kolkata 10.5 10.3 4.6 11.1 10.7 4.6 11.4 11.0 4.8
Lucknow 9.1 8.5 4.5 10.0 9.7 4.6 10.2 10.3 5.2
Mumbai 11.4 10.8 4.7 11.8 12.2 4.6 11.6 12.5 5.3
Nagpur 7.7 6.7 4.1 8.8 8.3 4.1 9.2 10.0 4.7
Patna 7.9 7.2 3.3 8.2 7.8 3.6 8.5 8.5 4.1
Thiruvananthapuram 9.0 7.6 4.7 10.1 9.6 4.9 10.6 10.5 5.4
Chandigarh 9.7 9.2 4.2 8.6 8.5 4.6 9.2 8.7 4.7
Ranchi 7.9 7.4 3.3 8.8 8.2 3.8 8.6 8.6 4.9
Raipur 7.2 5.9 3.4 7.6 6.2 3.7 6.0 5.4 5.2

Table 7: Cross-tabulation of Current and Three Months Ahead Inflation Expectations: June 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 22 4 4 2 0 5 0 0 0 0 2 0 1 0 1 0 3 0 44
1-<2 2 28 7 3 0 1 0 0 0 0 0 0 0 0 0 0 0 0 41
2-<3 6 14 103 46 18 8 2 0 0 0 0 0 0 0 0 0 0 1 198
3-<4 3 6 12 79 68 32 6 1 1 0 0 0 0 0 0 1 0 0 209
4-<5 7 1 7 23 127 87 52 10 8 1 1 0 1 0 0 0 0 1 326
5-<6 7 1 11 20 24 421 158 199 77 6 38 0 1 0 0 1 0 1 965
6-<7 4 0 1 3 10 5 148 78 62 15 12 1 3 0 0 1 0 0 343
7-<8 3 1 0 1 0 16 2 188 93 62 45 2 3 1 2 1 0 0 420
8-<9 2 0 1 1 2 3 8 9 161 88 99 9 15 3 3 2 1 0 407
9-<10 3 0 0 1 0 4 3 2 3 112 58 23 12 4 3 2 2 1 233
10-<11 4 0 2 7 3 23 3 14 16 2 363 64 156 29 8 100 34 2 830
11-<12 0 0 0 0 0 1 0 0 2 1 0 34 12 9 4 8 2 0 73
12-<13 0 0 0 1 0 1 0 2 0 0 4 0 34 5 12 15 2 0 76
13-<14 0 0 0 0 0 0 0 0 0 0 0 0 0 13 4 6 2 0 25
14-<15 0 0 0 0 1 0 1 1 0 0 0 0 0 0 16 9 12 0 40
15-<16 1 0 0 3 0 3 0 1 1 1 7 0 2 2 4 62 80 1 168
>=16 2 0 0 1 1 6 1 2 1 0 23 2 1 0 1 20 724 6 791
Total 66 55 148 191 254 616 384 507 425 288 652 135 241 66 58 228 862 13 5189

Table 8: Cross-tabulation of Current and One Year Ahead Inflation Expectations: June 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 24 2 3 4 0 5 0 0 1 0 0 0 0 0 0 1 4 0 44
1-<2 11 14 3 5 4 3 0 0 0 1 0 0 0 0 0 0 0 0 41
2-<3 42 4 60 20 37 22 8 1 3 0 0 0 0 0 0 0 0 1 198
3-<4 26 3 5 41 36 53 17 10 10 1 4 0 0 1 0 1 1 0 209
4-<5 42 1 5 10 86 51 47 30 22 13 10 2 3 0 0 1 1 2 326
5-<6 85 1 4 7 12 256 64 169 107 48 159 9 13 5 1 14 4 7 965
6-<7 30 0 0 2 3 5 93 36 77 21 40 8 12 4 4 1 3 4 343
7-<8 28 0 0 2 0 7 3 124 39 60 85 18 29 5 3 11 4 2 420
8-<9 21 0 1 3 1 4 2 3 101 31 114 19 66 10 8 13 9 1 407
9-<10 20 0 0 0 0 3 0 5 4 61 32 34 29 12 12 13 8 0 233
10-<11 45 0 2 1 1 16 0 13 10 3 252 17 102 40 39 178 108 3 830
11-<12 2 0 0 0 0 0 1 0 2 1 1 32 3 8 4 9 10 0 73
12-<13 5 0 0 0 0 1 0 0 1 0 2 0 26 3 7 12 19 0 76
13-<14 4 0 0 0 0 0 0 0 0 0 0 0 0 9 0 4 8 0 25
14-<15 0 0 0 0 0 0 0 1 0 1 0 0 1 0 8 5 24 0 40
15-<16 8 0 0 0 0 1 0 1 1 0 7 1 1 0 0 49 98 1 168
>=16 46 0 0 0 2 3 1 1 1 1 16 1 1 0 1 22 681 14 791
Total 439 25 83 95 182 430 236 394 379 242 722 141 286 97 87 334 982 35 5189

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.


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