Indian Households See Inflation Falling, RBI Survey Says

Indian households expect inflation to moderate in the coming months and are more optimistic about their future earnings and employment prospects, according to surveys by the Reserve Bank of India.

(Bloomberg) — Indian households expect inflation to moderate in the coming months and are more optimistic about their future earnings and employment prospects, according to surveys by the Reserve Bank of India.

Households’ 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 RBI’s May round of surveys from March, the central bank said. 

Falling price expectations and improving demand conditions helped the central bank pause for the second time in Thursday’s policy review. Governor Shaktikanta Das reiterated the pause was not a pivot, and uncertain weather leading to deficient, or unevenly distributed monsoon could raise prices. 

In a separate set of surveys, 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.”

The share of households expecting prices to rise has come down in the May survey, but “among respondent categories, inflation expectations of retired persons were the highest,” the central bank said. 

Respondents remained optimistic about the general economic situation in the year ahead. Households’ perception 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.

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%. 

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