Inflation expectations are integral to targeting of inflation by central banks. But, while low inflation can keep expectations subdued, can an excise duty cut lower inflation expectations? Turns out it can. According to a Reserve Bank of India snap survey conducted after the May 21 fuel excise duty cut, households' one-year-ahead inflation expectations fell by around 100 basis points. An even larger fall was seen after the excise duty cut announced in early November. This is because fuel is a key component of households' consumption basket and has an immediate impact on their monthly budgets.