India’s households expect inflation to taper off in the coming months and sound more confident about their future incomes and job prospects, surveys by the Reserve Bank of India reveal.
Moreover, the median inflation perception for the current period, as well as for the next three months and one year ahead, moderated by 10 basis points each in the RBI’s May round of surveys from March, the central bank said on Thursday.
Respondents were optimistic about general economic conditions in the year ahead. Researchers found that consumer confidence is getting a boost, and is steadily rising since the pandemic “on the back of improved assessment for all the survey parameters, barring essential spending.”
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The proportion of households expecting prices to rise has fallen in the May survey, but “among respondent categories, inflation expectations of retired persons were the highest,” the central bank said.
The perception of households has been improving steadily since September 2022 and they “remain fairly optimistic on employment conditions and future earnings over the next one year,” the RBI said.
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Separately, professional forecasters expect the economy to grow at 6% in the current fiscal year that started in April, below the RBI’s own forecast of 6.5%.
Easing inflation and a pick-up in the economy enabled the Monetary Policy Committee (MPC) to leave the repo rates unchanged on Thursday, following a pause in April. However, the central bank left the “withdrawal of accommodation” stance unchanged to give itself room to tighten policy should adverse events take place.