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 | |