Household Inflation Expectations Ease, Finally: RBI Survey

The share of households expecting higher inflation has fallen, according to the results of a Reserve Bank of India survey.

Households’ median inflation perceptions for the current period moderated by 70 basis points to 9.7% in January 2022 compared with November last year.

The median inflation perception for three months ahead declined by 170 basis points to 10.6%, and for one year ahead by 190 basis points to 10.7%, as per the central bank's survey.

The results show that the share of respondents expecting higher inflation has significantly reduced from the November 2021 round of the survey.

Households expect inflation to be range-bound in the near-to-medium term, as reflected in the reduced gap between their current inflation perception and their future inflation expectations, the release said.

Capacity Utilisation Picks Up

At the aggregate level, capacity utilisation for the manufacturing sector recovered to 68.3% in the second quarter of FY22, after the waning of the second wave of Covid-19, compared to 60% in the previous quarter.

Improving capacity utilisation and the pick-up in non-food bank credit, supportive monetary and liquidity conditions, sustained buoyancy in merchandise exports and stable business outlook augur well for aggregate demand, the Monetary Policy Committee's resolution had said.

Consumer Confidence: A Slow Rise After A Large Fall

Consumer confidence for the current period recorded a gradual improvement for the third successive round of the survey, though it remained in the pessimistic zone.

It rose to 63.7 in the latest round in January, compared to 62.3 in November. The marginal improvement in the current situation index is on the back of better sentiments on general economic situation, household income and spending.

The one-year ahead outlook, as reflected by the future expectations index, remained in the optimism zone but moderated as the latest survey period coincided with a surge in Covid-19 cases.