Households expect inflation to hit 10% in 3 mths: RBI survey

Inflation expectations of households returned to double digits after two quarters, with many of them believing inflation to cross 10 per cent in the next three months, an RBI sponsored survey showed today.
"... The proportion of respondents expecting prices to rise by more than current rate has increased as compared to the previous round of survey for both three-month and one-year ahead period for most of the product groups except housing prices," it said.
Households expect inflation to be 10.1 per cent in the next three month period, up from 8.5 per cent and 8.3 per cent, respectively in the previous two surveys.

The expectations for the next one year is that inflation would touch 10.3 per cent, as against 9.1 per cent and 8.9 per cent in the previous two surveys.
However, majority of the respondents continues to expect similar or lower rate of price change or expects the prices to remain unchanged or even fall.
"The overall sentiment is mainly driven by expectations for prices of food products and cost of services," the survey added.

The 'Inflation Expectations Survey of Households' for June 2015 captures the inflation expectations of 4,994 urban households across 16 cities, for the next three-month period and the next one-year period.

"These expectations are based on their individual consumption baskets and hence these rates should not be considered as benchmark of official measure of inflation" the survey said.
In its third bi-monthly monetary policy announcement of the fiscal, RBI said that excluding food and fuel, inflation rose in respect of all sub-groups other than housing.
The momentum of price increases remained high for education. Inflation pressures increased for personal care and effects and household goods and services sub-groups.
Inflation in Consumer Price Index (CPI) excluding food, fuel, petrol and diesel has been rising steadily since April and exceeded headline inflation through first quarter.

The central bank said the survey results are based on views of the respondents which are not necessarily shared by the RBI.