Inflation (Photo: Bloomberg)
Perhaps showing the effect of monetary policy actions, households’ view of current inflation eased 50 basis points (bps) from the July 2023 survey round to 8.4% in September 2023.
The Reserve Bank of India’s bimonthly survey of inflation expectations of households (IESH) showed that household inflation expectations declined by 90 basis points in three months to 9.1 percent. They decreased by 40 bp. for one year ahead and reached 9.9 percent.
The results of the September 2023 bimonthly round were released alongside the monetary policy review. The survey was conducted between September 2-11, 2023 in 19 major cities with responses from 6,066 urban households. Female respondents accounted for 50.4% of this sample.
Inflation expectations have returned to single digits for the first time since the start of the Covid-19 pandemic and households expect lower prices and inflationary pressures for most product groups, the RBI said.
The RBI also conducted a consumer confidence survey. It showed that consumer confidence for the current period has returned to its recovery path after a brief pause in the July 2023 survey round.
The Current Situation Index (CSI) hit a four-year high on the back of respondents’ better assessment of the current general economic situation and employment conditions in September 2023.
The overall economic outlook, as well as the outlook for employment, income and spending, is expected to improve further over the next one year.
Households remain highly optimistic about future earnings, although their sentiments about current earnings remain around their level since July 2023. Respondents are less pessimistic about prevailing price levels and inflation compared to a year ago.
Although price expectations for next year remain negative, respondents’ pessimism on this front has moderated in the latest round of surveys, it added.
First published: October 9, 2023 | 8:36 p.m IST