Household Inflation Expectations Remain Elevated, Shows RBI Survey
Households expect inflation to remain elevated on account of costlier food, non-food products and services.
Households’ median inflation perception for the current period stood at 10.3% in July compared with 10.2% in May, according to a survey by the Reserve Bank of India.
Median inflation expectations for three months and one-year ahead increased 50 basis points and 60 basis points, respectively, in the latest survey round.
The aggregate capacity utilisation level increased to 69.4% in the quarter ended March 2021 from 66.6% in the previous three months, a separate RBI survey on ‘Order Books, Inventories and Capacity Utilisation’ showed. That came as demand gradually improved before the deadlier second wave of the Covid-19 pandemic stalled the nascent recovery in economic activities.
New order growth on an annual basis remained positive from Q2 to Q4 FY21 after remaining in the negative terrain for the two quarters prior to that, the survey showed.
Consumer confidence in the current period stayed near the all-time low level recorded in the previous survey as most households reported lower incomes and higher prices over a year ago, a third survey by the central bank showed. Consumer confidence has been in the negative territory since July 2019.
Still, driven by substantial improvements in the outlook for general economic situation and employment scenario after waning of the second wave of the pandemic, the future expectations index returned to optimistic territory, with higher confidence of a pick-up in income, spending and employment prospects, the consumer confidence survey showed.
Another survey by the apex bank on the industrial outlook of the manufacturing sector found that manufacturers expect production volumes, new orders and job landscape to improve in Q2 FY22 over the previous quarter.
Manufacturers, it said, expect improvement in overall financial situation as well. A major segment of the respondents, however, anticipates continued pressure from input costs and salary outgo.
Services sector companies remain optimistic about the overall business situation as well. Both full-time and part-time employment is expected to expand in the next [July-September] quarter. Survey respondents expect input costs pressures and cost of finance to increase and selling prices to harden. But profit margins are envisaged to improve.