Household inflation expectation: Rarely in sync, yet a key policy driver

There will always be a gap between actual inflation and household expectation. Yet the latter is broadly indicative of trends and is a critical input for controlling prices

Every two months, the Reserve Bank of India does a survey of nearly 6,000 families in 18 cities to ascertain their expectations of where consumer inflation is headed. It records how households are thinking about inflation in three time frames: the current situation, three months down the line, and a year down the line. 

In its most recent data capture, it found that Indians are expecting inflation to moderate three months from now, and a year from now as well. Actual inflation too has softened, and is expected to moderate as supply constraints are easing, and unless food shortage plays