Households’ inflation expectation increases, shows RBI’s latest survey

Indian households’ inflation expectations have risen for the current period as well as for the three months ahead, showed the Reserve Bank of India’s March round of forward-looking surveys. The higher expectation of increase in general prices and inflation was led by the food and services groups, the survey said.

The central bank on April 7 released the results of the March 2021 round of the Inflation Expectations Survey of Households. The survey was conducted through field interviews during February 27 to March 08, 2021, in 18 major cities.  The results are based on responses from 5,955 urban households.

According to the survey, households’ median inflation perception for the current period as well as three months ahead expectation increased by 50 basis points (bps) and 80 bps, respectively, as compared to the January 2021 round. Median inflation expectations for one year ahead remained at an elevated level.

Inflation expectations increased for the major categories of respondents—financial sector employees, other employees, self-employed, homemakers, retired persons and daily workers--for both three months and one-year horizons, the RBI said.