Indian Households See Inflation Inching Up In Next One Year

Indian households expect inflation to inch up through three months to a year from now, led by costlier food and housing.

The Reserve Bank of India cut its policy rate for the first time in nearly five years Friday responding to a growth slowdown. However, newly appointed Governor Sanjay Malhotra said the central bank will remain focused on containing inflation.  

For the financial year beginning April 1, RBI expects average inflation at 4.2%, lower than 4.8% for the current fiscal.  

Households' perception for the three months and one-year horizons increased by 20 basis points and 10 basis points respectively, the central bank said in its households' inflation expectations survey released on its website Friday.

In such surveys, the direction, rather than the absolute level, is important. They were conducted during Jan. 2-11 in 19 major cities, garnering 6,096 responses of which over 55% were from women.

“The share of households anticipating rise in general prices and inflation for both near term as well as the coming year has increased,” the RBI said. 

In another survey titled consumer confidence survey, Indian consumers said they were marginally less confident for the current period “owing to somewhat tempered sentiments across the survey parameters except price level.” Their one-year ahead outlook remained “firmly in the optimistic territory” though their sentiments on major parameters moderated.