Households’ Inflation Expectations Survey

Today, the Reserve Bank released the results of the March 2019 round of the Inflation
Expectations Survey of Households (IESH) 1. The survey was conducted in 18 major cities
and the results are based on responses from 5,829 urban households.

Highlights:

i. The three months ahead and one year ahead median inflation expectations of
households dropped by 40 basis points (bps) each relative to the last survey round
conducted in December 2018 (Chart 1a, 1b, Table 2).

ii. On a cumulative basis, median inflation expectations came down by 160 basis points for
the three months ahead horizon and by 170 basis points for the one year ahead horizon
from the September 2018 round.

iii. The gap between households’ current inflation perceptions and their future expectations
has also narrowed in this round of the survey.

Chart 1a: Median Inflation Rate - Perception Chart 1b: Median Inflation Rate - Perception
and Three Months ahead Expectation and One Year ahead Expectation

10 9.8 9.8
9.4 10
9.0
9 9 8.5
8.2
8.1
Per cent

Per cent

7.8
8 8.4 8
8.2 8.4
8.2
7 7
7.1 7.1
6.9 6.9
6 6
Sep-18 Nov-18 Dec-18 Mar-19 Sep-18 Nov-18 Dec-18 Mar-19
95 per cent Confidence Interval 95 per cent Confidence Interval
Three months ahead
One year ahead
Current
Current

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

iv. The proportion of respondents expecting prices of food, non-food products and
consumer durables to rise in the next three months increased as compared with the
December 2018 round (Table 1a).

v. The improvement in households’ qualitative expectations on changes in the price level

as reported in the December 2018 round over the next one year was sustained.

vi. A smaller proportion of respondents believed that prices will rise at more than the current
rate over the year ahead horizon, reflecting mainly their sentiments with respect to food
prices and the cost of housing.

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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 Table 1(a): Product-wise Expectations of Prices for Three Months ahead
(Percentage of Respondents)
Survey period ended Mar-18 Sep-18 Nov-18 Dec-18 Mar-19
General Estimate SE Estimate SE Estimate SE Estimate SE

Prices will increase 80.2 80.4 0.92 77.9 0.91 72.9 1.04 74.8 1.02
Price increase more than current rate 45.4 49.1 1.15 47.4 1.12 46.2 1.14 44.1 1.08
Price increase similar to current rate 27.2 27.6 1.00 25.6 1.00 23.3 0.96 26.9 0.97
Price increase less than current rate 7.5 3.7 0.38 4.9 0.59 3.4 0.39 3.8 0.41
No changes in prices 17.8 17.4 0.88 19.2 0.87 21.2 0.98 21.9 0.98
Decline in prices 2.1 2.2 0.31 2.9 0.33 5.8 0.46 3.4 0.36
Food Product
Prices will increase 79.6 79.5 0.89 77.2 0.89 70.7 0.98 73.7 0.96
Price increase more than current rate 44.0 48.9 1.12 46.4 1.03 42.7 1.08 43.6 1.06
Price increase similar to current rate 24.9 24.5 0.91 23.6 0.91 22.4 0.87 24.1 0.88
Price increase less than current rate 10.7 6.1 0.48 7.3 0.63 5.7 0.48 6.0 0.49
No changes in prices 15.4 15.5 0.82 16.9 0.81 17.2 0.79 17.5 0.84
Decline in prices 5.0 4.9 0.40 5.9 0.46 12.0 0.65 8.8 0.56
Non- Food Product
Prices will increase 75.0 78.9 0.87 75.8 0.90 67.6 1.00 71.3 0.94
Price increase more than current rate 39.6 47.5 1.11 45.2 1.07 40.8 1.08 41.0 1.02
Price increase similar to current rate 25.4 25.3 0.91 24.1 0.94 21.6 0.89 24.5 0.86
Price increase less than current rate 10.0 6.1 0.48 6.5 0.61 5.3 0.47 5.7 0.48
No changes in prices 20.8 17.1 0.81 18.5 0.79 20.5 0.85 21.9 0.87
Decline in prices 4.2 4.0 0.38 5.8 0.48 11.9 0.63 6.8 0.47
Household Durables
Prices will increase 63.7 56.6 1.05 57.9 1.06 56.8 1.08 59.5 1.05
Price increase more than current rate 34.7 32.4 1.05 33.8 1.03 34.8 1.08 35.2 0.99
Price increase similar to current rate 20.7 19.5 0.80 18.9 0.80 17.9 0.85 19.3 0.79
Price increase less than current rate 8.3 4.7 0.41 5.2 0.50 4.1 0.39 5.0 0.41
No changes in prices 26.2 30.8 0.98 29.7 0.98 24.8 0.91 27.7 0.96
Decline in prices 10.1 12.5 0.66 12.4 0.66 18.4 0.77 12.8 0.62
Cost of Housing
Prices will increase 70.0 67.1 0.92 68.7 0.96 69.1 1.03 68.1 0.98
Price increase more than current rate 43.9 45.2 1.02 44.5 1.05 46.5 1.06 44.2 0.97
Price increase similar to current rate 18.8 17.9 0.78 19.0 0.83 18.2 0.79 19.5 0.76
Price increase less than current rate 7.3 4.0 0.40 5.2 0.51 4.5 0.41 4.4 0.41
No changes in prices 22.4 24.1 0.87 23.7 0.88 22.2 0.94 22.4 0.88
Decline in prices 7.7 8.8 0.59 7.6 0.54 8.6 0.57 9.5 0.60
Cost of Services
Prices will increase 70.2 67.7 1.04 68.2 0.99 65.7 1.10 66.4 1.02
Price increase more than current rate 38.3 41.8 1.15 40.4 1.06 40.2 1.11 39.2 1.00
Price increase similar to current rate 23.5 21.0 0.89 22.4 0.86 21.2 0.82 21.9 0.84
Price increase less than current rate 8.3 5.0 0.43 5.3 0.48 4.3 0.41 5.3 0.45
No changes in prices 26.6 29.6 1.01 28.8 0.97 28.2 1.02 28.9 0.99
Decline in prices 3.3 2.7 0.33 3.0 0.35 6.1 0.45 4.7 0.42

1. The table provides estimates and standard errors for qualitative responses from the September 2018 round onwards. For earlier rounds, the
results are based on sample proportions.

2. Constituent items may not add up to the corresponding total, due to rounding off.

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 Table 1(b): Product-wise Expectations of Prices for One Year ahead
(Percentage of Respondents)
Survey period ended Mar-18 Sep-18 Nov-18 Dec-18 Mar-19
General Estimate SE Estimate SE Estimate SE Estimate SE

Prices will increase 90.8 88.3 0.77 89.7 0.65 83.8 0.82 84.4 0.90
Price increase more than current rate 56.7 59.7 1.15 60.0 1.11 57.5 1.15 54.6 1.08
Price increase similar to current rate 28.0 25.3 0.97 26.4 0.97 23.3 1.00 26.6 0.93
Price increase less than current rate 6.2 3.3 0.35 3.4 0.43 3.0 0.37 3.2 0.38
No changes in prices 7.1 9.1 0.69 7.6 0.57 11.3 0.73 12.6 0.83
Decline in prices 2.2 2.6 0.32 2.7 0.33 4.9 0.43 3.0 0.33
Food Product
Prices will increase 85.0 84.8 0.78 85.4 0.73 80.0 0.82 80.1 0.87
Price increase more than current rate 47.4 52.5 1.16 52.3 1.14 50.6 1.08 47.2 1.06
Price increase similar to current rate 28.9 27.0 0.96 27.5 0.96 24.7 0.93 28.0 0.88
Price increase less than current rate 8.7 5.3 0.45 5.7 0.51 4.7 0.43 5.0 0.44
No changes in prices 10.2 9.7 0.64 9.4 0.60 12.1 0.68 14.0 0.76
Decline in prices 4.8 5.5 0.45 5.2 0.45 7.9 0.52 5.9 0.45
Non- Food Product
Prices will increase 80.0 82.3 0.79 82.4 0.78 76.4 0.92 78.2 0.89
Price increase more than current rate 44.2 51.0 1.18 51.6 1.10 47.5 1.09 45.7 1.05
Price increase similar to current rate 26.8 26.1 0.91 25.2 0.90 24.2 0.92 27.5 0.89
Price increase less than current rate 9.0 5.2 0.44 5.6 0.50 4.7 0.43 5.0 0.41
No changes in prices 15.8 13.1 0.70 12.7 0.68 15.8 0.78 16.9 0.80
Decline in prices 4.3 4.6 0.40 4.9 0.43 7.7 0.54 5.0 0.41
Household Durables
Prices will increase 71.1 67.5 0.97 70.1 0.98 66.9 1.02 68.3 0.99
Price increase more than current rate 40.1 40.7 1.10 43.0 1.10 42.0 1.09 41.3 1.02
Price increase similar to current rate 23.4 22.0 0.83 22.0 0.88 20.4 0.84 22.6 0.81
Price increase less than current rate 7.7 4.8 0.42 5.1 0.47 4.5 0.40 4.4 0.41
No changes in prices 19.9 22.6 0.84 20.4 0.85 20.1 0.91 21.9 0.89
Decline in prices 9.0 10.0 0.58 9.6 0.61 13.0 0.69 9.8 0.57
Cost of Housing
Prices will increase 80.2 77.9 0.89 80.6 0.79 79.6 0.85 77.6 0.86
Price increase more than current rate 50.9 52.9 1.08 53.8 1.04 55.9 1.00 51.0 1.01
Price increase similar to current rate 22.5 21.0 0.87 22.5 0.91 19.8 0.78 22.9 0.77
Price increase less than current rate 6.8 4.0 0.38 4.3 0.44 3.9 0.39 3.8 0.36
No changes in prices 13.9 15.1 0.74 13.3 0.68 13.7 0.74 15.2 0.75
Decline in prices 5.9 7.0 0.52 6.1 0.50 6.7 0.50 7.2 0.53
Cost of Services
Prices will increase 82.6 82.0 0.81 83.3 0.75 77.9 0.88 78.8 0.87
Price increase more than current rate 45.3 49.7 1.18 52.2 1.11 49.0 1.11 47.5 1.02
Price increase similar to current rate 28.6 27.3 0.96 25.7 0.92 24.1 0.90 26.4 0.87
Price increase less than current rate 8.7 5.0 0.44 5.4 0.48 4.8 0.44 4.8 0.42
No changes in prices 14.9 15.6 0.76 13.5 0.68 17.1 0.82 17.4 0.81
Decline in prices 2.5 2.4 0.29 3.1 0.34 5.0 0.44 3.9 0.37

1. The table provides estimates and standard errors for qualitative responses from the September 2018 round onwards. For earlier rounds, the
results are based on sample proportions.

2. Constituent items may not add up to the corresponding total, due to rounding off.

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 Table 2: Inflation Expectations of Various Groups: March 2019

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 8.0 0.09 6.9 0.14 8.7 0.10 7.8 0.12 8.3 0.12 8.1 0.17
Gender-wise
Male 7.9 0.13 7.0 0.18 8.6 0.13 7.7 0.16 8.2 0.16 7.9 0.20
Female 8.1 0.13 7.1 0.18 9.0 0.13 8.2 0.17 8.6 0.16 8.5 0.21
Category-wise
Financial Sector
7.4 0.61 6.1 0.48 8.1 0.82 6.5 0.56 8.1 0.81 7.6 0.75
Employees
Other Employees 8.2 0.18 7.1 0.22 8.8 0.19 7.9 0.21 8.3 0.23 8.1 0.33
Self Employed 7.6 0.19 6.7 0.30 8.3 0.20 7.4 0.22 7.9 0.24 7.8 0.28
Homemaker 8.2 0.14 7.1 0.20 9.1 0.15 8.3 0.19 8.8 0.19 8.7 0.24
Retired Persons 8.2 0.30 7.5 0.25 8.9 0.32 8.2 0.46 8.6 0.43 8.4 0.55
Daily Workers 8.1 0.22 7.1 0.28 9.0 0.22 8.1 0.31 8.5 0.28 8.5 0.47
Other category 7.5 0.23 6.3 0.28 8.2 0.23 7.3 0.24 7.9 0.28 7.7 0.33
Age Group-wise
Up to 25 years 7.3 0.15 6.1 0.18 7.9 0.17 7.0 0.23 7.5 0.22 7.3 0.32
25 to 30 years 8.0 0.19 6.8 0.28 8.8 0.19 7.9 0.23 8.4 0.23 8.3 0.27
30 to 35 years 7.9 0.19 6.8 0.26 8.7 0.19 7.9 0.25 8.5 0.24 8.3 0.33
35 to 40 years 8.1 0.20 7.1 0.24 8.8 0.20 8.0 0.27 8.5 0.24 8.4 0.33
40 to 45 years 7.9 0.22 6.9 0.33 8.7 0.23 7.8 0.26 8.2 0.26 7.9 0.35
45 to 50 years 8.3 0.21 7.3 0.24 9.0 0.22 8.4 0.31 8.1 0.28 8.1 0.41
50 to 55 years 8.5 0.30 7.3 0.29 9.4 0.31 8.2 0.39 8.8 0.36 8.4 0.42
55 to 60 years 8.4 0.29 7.5 0.31 9.1 0.30 8.3 0.63 8.3 0.36 8.0 0.65
60 years and above 8.4 0.23 7.7 0.29 9.2 0.25 8.5 0.43 8.9 0.31 8.8 0.55
City-wise
Ahmedabad 9.8 0.45 9.5 0.81 10.9 0.44 10.6 0.57 9.7 0.50 10.1 0.51
Bengaluru 7.0 0.29 6.0 0.24 8.0 0.27 7.3 0.37 9.0 0.30 8.8 0.38
Bhopal 8.0 0.49 7.9 1.04 8.6 0.69 8.0 1.20 7.7 0.64 7.9 1.04
Bhubaneswar 4.5 0.38 4.4 0.42 5.6 0.58 5.4 0.44 5.8 1.14 5.9 0.85
Chennai 8.4 0.30 8.2 0.35 9.5 0.34 9.6 0.48 10.2 0.39 10.5 0.22
Delhi 7.3 0.18 6.3 0.26 7.7 0.21 6.8 0.29 6.8 0.33 6.2 0.38
Guwahati 4.4 0.53 4.1 0.72 5.4 0.45 5.0 0.38 4.8 0.41 5.0 0.38
Hyderabad 8.5 0.41 6.8 0.66 9.7 0.39 8.6 0.61 10.2 0.39 10.0 0.58
Jaipur 7.2 0.49 6.7 0.53 7.4 0.50 6.9 0.55 6.6 0.52 6.3 0.58
Kolkata 8.8 0.32 7.7 0.35 9.6 0.35 8.8 0.53 9.2 0.36 8.8 0.50
Lucknow 7.6 0.41 7.2 0.42 8.5 0.42 8.1 0.31 8.6 0.55 9.6 0.34
Mumbai 8.6 0.24 7.9 0.37 9.4 0.24 9.0 0.50 8.2 0.33 8.3 0.53
Nagpur 8.1 0.55 6.7 0.76 8.3 0.49 6.8 0.65 7.3 0.72 6.6 0.59
Patna 6.7 0.39 6.2 0.34 6.9 0.39 6.3 0.35 6.4 0.46 6.3 0.29
Thiruvananthapuram 6.7 0.47 5.6 0.38 8.3 0.53 7.5 0.75 10.1 0.67 10.4 0.89
Chandigarh 8.0 0.66 7.1 0.98 8.0 0.64 7.2 0.79 6.8 0.82 6.6 0.86
Ranchi 7.5 0.78 6.2 1.04 7.9 0.85 6.4 1.11 7.3 0.76 6.3 1.14
Raipur 7.3 0.50 6.3 0.62 7.1 0.49 6.2 0.65 4.3 0.79 2.4 1.65

Note: The table provides estimates and standard errors for quantitative responses for the March 2019 round.

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 Table 3: Household Inflation Expectations – Current Perception, Three Months and One Year Ahead Expectations

Three Months ahead

Current Perception One Year ahead Expectation
Expectation
Mean Median Mean Median Mean Median
Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE Estimate SE

Mar-18 8.2 -- 7.2 -- 8.6 -- 7.8 -- 8.9 -- 8.6 --

Sep-18 9.2 0.12 8.4 0.19 9.9 0.12 9.4 0.27 9.6 0.14 9.8 0.23
Nov-18 9.1 0.11 8.2 0.18 9.7 0.12 9.0 0.22 9.6 0.12 9.8 0.25
Dec-18 8.3 0.11 7.1 0.18 9.1 0.11 8.2 0.15 8.6 0.13 8.5 0.17
Mar-19 8.0 0.09 6.9 0.14 8.7 0.10 7.8 0.12 8.3 0.12 8.1 0.17
‘--‘ Calculation of Standard Error was initiated from the September 2018 round onwards.
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)

Households Cost of
Survey period ended Food Non-Food Housing
durables services

Three Months Ahead

Mar-18 63.7 63.2 55.6 57.8 62.7
Sep-18 64.4 65.3 52.8 58.6 64.3
Nov-18 65.6 66.8 56.5 61.4 66.2
Dec-18 62.9 64.0 55.3 62.4 64.3
Mar-19 62.6 62.3 54.9 58.8 63.4
One Year Ahead
Mar-18 69.0 66.3 59.6 64.3 69.2
Sep-18 72.2 71.5 60.0 66.5 71.4
Nov-18 73.5 72.3 62.7 67.7 73.2
Dec-18 72.5 71.7 62.5 70.3 72.9
Mar-19 70.2 68.8 61.8 66.0 69.9

Note: Figures are based on sample observations

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 Table 5(a): Cross-tabulation of Number of Respondents by Current Inflation Perception and Three Months
Ahead Inflation Expectations: March 2019

Three Months Ahead Inflation Rate (per cent)

9- 10- 11- 12- 13- 14- 15- No
<1 1-<2 2-<3 3-<4 4-<5 5-<6 6-<7 7-<8 8-<9 >=16 Total
<10 <11 <12 <13 <14 <15 <16 idea
<1 25 1 2 4 3 5 0 0 0 0 2 0 0 0 0 0 0 0 42
1-<2 0 40 14 4 4 2 0 0 0 0 0 0 0 0 0 0 0 0 64
2-<3 3 14 176 62 48 22 1 2 1 0 0 0 0 0 0 0 0 0 329
3-<4 2 5 18 151 67 66 26 3 3 0 3 1 1 0 0 0 0 0 346
4-<5 1 0 13 24 272 88 64 11 10 1 0 0 2 0 0 0 0 0 486
Current Inflation Rate (per cent)

5-<6 0 1 9 25 27 680 129 178 87 12 79 1 1 0 0 4 0 2 1235

6-<7 0 0 3 3 8 8 265 74 57 18 10 1 7 0 0 1 2 0 457
7-<8 0 1 0 1 6 13 9 265 99 78 50 1 2 1 3 0 1 0 530
8-<9 0 0 0 2 0 4 2 3 198 55 102 8 13 5 0 2 2 0 396
9-<10 0 0 0 0 0 2 0 2 3 97 41 14 20 4 1 2 2 0 188
10-<11 2 1 2 0 3 20 3 7 7 6 423 38 117 34 7 126 47 2 845
11-<12 0 0 0 0 0 0 0 2 0 0 3 31 9 7 2 6 7 0 67
12-<13 0 0 0 0 1 1 0 0 2 0 1 1 24 6 8 27 4 0 75
13-<14 0 0 0 0 0 0 0 0 1 0 0 0 0 11 2 6 3 0 23
14-<15 0 0 0 0 0 0 0 0 0 1 0 0 0 1 16 4 7 0 29
15-<16 0 0 0 0 0 0 0 0 1 0 6 0 2 2 0 83 87 2 183
>=16 0 1 1 0 0 4 0 1 0 0 10 0 1 0 1 13 498 4 534
Total 33 64 238 276 439 915 499 548 469 268 730 96 199 71 40 274 660 10 5829

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: March 2019

One Year Ahead Inflation Rate (per cent)

9- 10- 11- 12- 13- 14- 15- No
<1 1-<2 2-<3 3-<4 4-<5 5-<6 6-<7 7-<8 8-<9 >=16 Total
<10 <11 <12 <13 <14 <15 <16 idea
<1 23 3 3 2 2 4 3 0 1 0 1 0 0 0 0 0 0 0 42
1-<2 16 22 5 11 0 2 4 1 0 1 1 0 1 0 0 0 0 0 64
2-<3 88 3 84 31 47 32 23 10 5 1 5 0 0 0 0 0 0 0 329
3-<4 66 0 5 78 30 66 38 18 17 8 14 1 2 1 0 2 0 0 346
4-<5 96 0 0 3 152 60 81 33 34 5 16 0 4 0 0 1 1 0 486
5-<6 191 0 2 11 16 398 90 156 101 38 185 3 17 2 1 15 7 2 1235
Current Inflation Rate (per cent)

6-<7 53 0 0 2 3 4 156 58 73 36 38 9 16 3 2 2 2 0 457

7-<8 73 1 0 0 2 4 6 154 63 83 96 13 17 5 2 7 2 2 530
8-<9 47 0 0 2 0 1 0 2 96 46 125 14 31 9 4 8 10 1 396
9-<10 26 0 0 0 0 0 0 5 3 59 27 15 30 5 6 6 6 0 188
10-
104 0 0 0 0 4 1 6 5 10 266 23 87 37 24 154 121 3 845
<11
11-
12 0 0 0 0 0 0 0 0 0 0 14 7 7 5 14 8 0 67
<12
12-
10 0 0 0 0 0 0 1 0 0 1 1 15 5 4 19 19 0 75
<13
13-
4 0 0 0 0 0 0 0 0 0 0 0 0 7 3 4 5 0 23
<14
14-
7 0 0 0 0 0 0 0 0 0 0 0 0 0 7 7 8 0 29
<15
15-
20 0 0 0 0 0 0 0 0 0 5 0 1 1 0 53 101 2 183
<16
>=16 90 1 0 0 0 1 0 1 0 0 5 0 0 0 1 3 426 6 534
Total 926 30 99 140 252 576 402 445 398 287 785 93 228 82 59 295 716 16 5829

Note: Figures are based on sample observations

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