Indian households have turned hawkish on inflation compared to their perception in May this year, the Reserve Bank's household inflation expectation survey indicates.
The latest survey indicates that general inflation levels are expected to be higher by 20 bps ( one basis point is 0.01 percent) across all time periods- current period, three month ahead, and one year ahead. While the current period inflation is expected at 8.2 percent compared to 8 percent expected in the May survey. Inflation expectation for three months ahead period and one year ahead period is expected at 9.4 compared to 9.2 expected in May and 10.1 percent compared to 9.9 percent respectiv ..
A larger share of households expects higher general prices and inflation as compared to the May 2024 survey round. 82.3 percent of respondents expect general price levels compared to 80.6 percent of the respondents expecting a price rise in the May survey.
Significantly it was in the case of food product prices and services prices that the percentage of respondents expecting the price rise to be higher in the latest round of survey. In the case of food products 84.2 percent of respondents expect food prices to rise compared to 81.8 percent expecting them to rise in the May survey.
Household inflation expectations, after witnessing a moderating trend between May 2022 and September 2023, have edged up on the back of high food inflation since ..
This, in turn, could be passed on by firms in the form of higher prices for services as well as goods, especially in a scenario of strong aggregate demand. These behavioural changes can then result in overall inflation becoming sticky, even after food inflation recedes.
Source Name : Economic Times