Indian households expect inflation to moderate in the near-term but see prices rising at a quicker pace a year ahead, according to a Reserve Bank of India (RBI) survey released on Wednesday.
“In the short-term, the proportion of respondents anticipating a rise in general prices and inflation has declined while it has increased for the one year ahead horizon,” the RBI said.
Households’ median perception of current inflation remained steady in July at 7.8%. Inflation expectations for the next three months eased 10 basis points to 9.2%, while expectations for year-ahead inflation inched up by 10 basis points to 9.4%, the RBI said.
Households’ perception of current and future inflation is much higher than actual retail inflation in the country.
CPI inflation was at a 18-month high of 4.38% in June. The RBI projects inflation to rise to 4.7% in the July-September quarter and further to 5.9% in the December quarter. The central bank projects CPI inflation to average 5% in 2026-27, driven by higher food and fuel prices.
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The results are part of RBI’s Households’ Inflation Expectations Survey, conducted during July 11-20 across 19 cities, with 5,905 responses.
The survey is conducted at bi-monthly intervals by the RBI and provides directional information on near-term inflationary pressures as expected by respondents.
Rural households’ current inflation perception and year-ahead expectation inched up by 20 basis points each to 6.1% and 7.4%, respectively in July.
Consumer confidence in rural areas worsened in July, falling deeper into the pessimistic zone, the RBI said. The one-year-ahead outlook deteriorated in July but remained in the optimistic territory, the central bank said.
In a separate forward-looking survey, the RBI found consumer confidence in urban areas deteriorated in July, with the Current Situation Index easing to 88.3 from 90.7 in the previous round. Urban consumers remained optimistic about the year-ahead outlook, even as optimism moderated from the previous survey round.
“Consumers remain optimistic on income and spending outlook amidst some concerns on the economic situation and employment in this survey round,” the central bank said.
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