Households’ median inflation perceptions for the current period increased by 90 basis points (bps- one bps is 0.01 percent)) since July 2022 to 10.2 per cent in September 2022, but remained flat compared to the expectations in the survey of the same period a year ago.
It rose by 50 bps each for both three months and one year ahead since the July survey to 11 percent and 10 basis points since last September’s survey. The Reserve Bank released the results of the September 2022 round of the Inflation Expectations Survey of Households. The survey was conducted from September 1 to 10, 2022 in 19 major cities.
“The extraordinary global circumstances that caused the heightened inflationary pressures have impacted both AEs and EMEs. India is, however, better placed than many of these economies” said governor Shaktikanta Das in his statement earlier on Friday. “ If high inflation is allowed to linger, it invariably triggers second order effects and unsettles expectations. Therefore, monetary policy has to carry forward its calibrated action on policy rates and liquidity conditions consistent with the evolving inflation growth dynamics. It must remain alert and nimble”. RBI raised the benchmark reo rate- the rate at which it lends to banks by 50 bps to 5.9 percent to rein in inflation that has remained above the central bank’s comfort levels for more than six months now.
Most categories of respondents expect higher inflation for both three months and one year ahead periods. A larger share of households expects higher prices for all product groups as compared to the previous round of the survey.
Overall prices and inflation expectations for the three months ahead period were generally aligned with food products, non-food products and cost of services, while they were more aligned with non-food products and cost of services for the longer horizon of one year. the survey said.