Urban households expect inflation@+13%

Feb 13 2012, 19:33 IST
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SummaryOnly 36% of respondents believed the RBI is taking the action to control inflation.

Urban households expect inflation to remain high till the second half of next financial year, a survey by the Reserve Bank of India (RBI) has found.

In December, 2012, household inflation is expected to be 13.3 per cent, higher than the 12.9 per cent perceived for September, 2012, and daily-wage workers and housewives expected higher inflation rates to continue, the survey said.

As per the 'Inflation Expectations Survey of Households: December 2011 (Round 26)' conducted by the apex bank, the rise is anticipated to be mainly on account of movement in food prices.

Only 36 per cent of the respondents believed the Reserve Bank is taking the necessary action to control inflation.

While the housewives surveyed expect inflation to stand at 13.7 per cent in December, 2012, daily wage workers said it would be 13.8 per cent.

On the other hand, both financial sector employees and the self-employed project inflation to be 12.8 per cent by the year-end.

"The general price expectations are observed to be more aligned with food price expectations as compared with other product groups. Around 90 per cent of the respondents appeared to have been driven by expected changes in food prices for arriving at general price expectations," the survey said.

The survey found that households expect inflation to rise further by 140 basis points during the next 12 months from the perceived current rate of 11.9 per cent in the October-December quarter of the current fiscal.

Headline inflation, as measured by Wholesale Price Index (WPI), fell to a two-year low of 7.47 per cent in December, 2011. Before that, it was hovering near double digits for most of the last two years.

"From the September, 2010, round of the survey, household inflation expectations are higher than the official inflation rates," the survey said.

The survey was conducted in October-December, 2011, and covered 4,000 urban households across 12 cities for the January-March, 2012, quarter and the January-December, 2012, period.

The RBI and the government have forecast headline inflation to moderate to around 7 per cent by March, 2012. The latest survey is the 26th conducted by the RBI to find inflation expectations of Indian households. The Reserve Bank has been conducting such surveys on a quarterly basis since 2005.

"Expectations on general price rise were mainly influenced by movements in food prices," the survey said.

While 96.8 per cent respondents said they expects food prices to rise during 2012, 96.2 per cent had a similar opinion

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