Households' Median Inflation Perception Increase By 60 Basis Points In July 2020

The Reserve Bank released the results of the July 2020 round of the Inflation Expectations Survey of Households (IESH) yesterday. In view of the Covid-19 pandemic, the survey was conducted through telephonic interviews during July 1-12, 2020 in 18 major cities. The results are based on responses from 5,411 urban households. The households' median inflation perception increased by 60 basis points in July 2020 as compared with the May 2020 survey round. Inflation expectations for both three months and one year horizons increased by 10 basis points each, over the previous round; three months ahead median inflation expectation stood higher than that for one year horizon for the second consecutive survey round. Households' expectations on price changes at aggregate level are closely aligned with those of food products and cost of services. Higher expectation of food prices over three month horizon vis-vis one year period contributed to higher short term inflation expectations.

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