RBI household inflation survey sees prices hardening

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Mumbai | April 06, 2017 10:34 PM

The Reserve Bank's latest survey on households' inflation expectations has found that a majority expect prices to go up in the quarter to June for all products.

India’s retail inflation had increased to a four-month high of 3.65 per cent in February due to rise in prices of fruits, sugar and confectionery. (Reuters)The Reserve Bank’s latest survey on households’ inflation expectations has found that a majority expect prices to go up in the quarter to June for all products. The findings were based on March 2017 round of the Inflation Expectations Survey of Households (IESH). Conducted in 18 cities, the results are based on responses received from 5,084 urban households covering various occupational categories. “A higher proportion of respondents expect the general level of prices to increase in the next three months and over one year ahead as compared to the December 2016 round across all product groups,” the RBI survey revealed.

Around 74 per cent of the respondents expected general level of prices to increase by June, with about half of them saying prices will rise at more than the current rate across all product groups.

India’s retail inflation had increased to a four-month high of 3.65 per cent in February due to rise in prices of fruits, sugar and confectionery.

Across occupations in the financial sector, self-employed, housewives, retired people, daily workers and others, inflation expectation was seen moving up by 0.2-0.5 per cent for the three months and one year ahead.

It was in contrast to the sharp decline observed in the two preceding rounds, the survey noted.

Inflation expectations fell sharply in Guwahati and Ranchi while it rose markedly in Raipur and Thiruvananthapuram.

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There was a separate survey on Consumer Confidence Survey in Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi.

Based on 4,890 responses on households’ perceptions and expectations of general economic conditions, employment, price situation and income and spending, it painted a picture of pessimism due to “worsening sentiment on economic conditions and price situation”.

The Industrial Outlook Survey on qualitative assessment of business situation by companies in the manufacturing sector for the last quarter of 2016-17 and their expectations for first quarter of 2017-18 revealed a substantial improvement in sentiment on demand conditions.

As many as 1,244 companies taking part in the survey were more optimistic about production, order books and capacity utilisation in the last quarter of 2016-17 than a quarter ago.

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