Households expect inflation to moderate; consumer confidence dips

Indian households expect moderation in inflation for the near term while consumer confidence declined marginally due to somewhat tempered sentiments, according to the Reserve Bank of India’s (RBI’s) forward-looking surveys in January 2025.

 

Inflation expectations showed an upward trajectory for three months and one-year ahead period. Reflecting confidence on spending, households’ assessment on one-year ahead outlook remained firmly in the optimistic territory.

 

Households’ median perception of current inflation declined marginally by 10 basis points (bps) to 8.3 per cent, as compared 8.4 per cent of the previous survey round held in November 2024.

 

Median inflation expectation for the three months horizon increased by 20 bps to 9.3 per cent. It inched up by 10 bps to 10.2 per cent for one year ahead.

 

The RBI’s latest round of the survey of households’ inflation expectations was conducted during January 2-11, 2025, covering 6,096 respondents in 19 major cities. Women respondents accounted for 55.4 per cent of this sample, the RBI said in a statement.

 

There was an increase in share of households anticipating rise in general prices and inflation for both near term as well as the coming year.

 

They expect somewhat higher inflationary pressures across product groups, especially for food products and housing, for both the time horizons. For one year ahead, the price expectation of households is closely aligned with food prices and housing-related expenses, the survey showed.

 

Meanwhile, the consumer confidence survey showed subdued sentiments on spending for both essential and non-essential outlays vis-à-vis the November 2024 round. Despite some moderations, the sentiments about future spending remained strong, the RBI said.

 

The current situation index (CSI) moderated by 0.3 point to 93.7 in January 2025. The future expectations index (FEI) declined by 1.2 points to 120.7 in the latest survey.