×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Indians’ inflation expectations on a high: RBI survey

Indians’ inflation expectations on a high: RBI survey
Comment E-mail Print Share
First Published: Thu, May 13 2010. 10 58 PM IST
Updated: Thu, May 13 2010. 10 58 PM IST
Mumbai: Indian households believe inflation has peaked and their expectations about the future trajectory of prices is heavily influenced by current food prices, a survey by the Reserve Bank of India shows.
RBI on Wednesday released, for the first time, data from a survey of 4,000 households spread over 12 cities that it has been doing over the past four years. This data shows that inflation expectations of households had hit a bottom in December 2008 and then shot up till the end of the next calendar year, thanks largely to the rise in food prices.
Inflation expectations of citizens are subjective assessments and different from the actual wholesale and consumer inflation numbers released periodically by the government. These expectations are an important input for interest rate policy decisions because they influence wage demands and consumer spending patterns in an economy.
The household survey is done every quarter and the latest one is for the period January to March. RBI has kept the actual survey data under wraps till now. RBI, which has made “anchoring inflation expectations” an explicit goal of monetary policy, released the data on its website on Wednesday.
“The general price expectations are closer to food expectations indicating that respondents consider food prices very important when they think about the prices in general,” the central bank said in an accompanying article.
India’s inflation upsurge has been led by food prices, though the virus has now spread to manufactured goods as well, one reason why RBI has increased interest rates twice this year and taken steps of such liquidity out from the financial system.
Data shows inflation expectations are highest among daily workers, retired persons and housewives. Interestingly, there was a wide-variation across cities, with citizens in Bangalore expecting inflation three months hence to be 15.8%, while households in Chennai expect inflation to be a modest 4.4% in three months.
The data also shows that even as significant gender-wise differences do not exist while guessing future inflation, the variability in responses is generally higher in female respondents as compared with males as far as the current inflation rate goes.
“For future inflation, usually the responses of male respondents are less cohesive,” the survey said.
anup.r@livemint.com
Comment E-mail Print Share
First Published: Thu, May 13 2010. 10 58 PM IST