Households see inflation rising in year's time

Public expectation of inflation inched up even when the CPI figures were showing record lows. RBI governor Urjit Patel said that high tomato prices did not show up in June inflation numbers which was at 1.46%.

Households' inflation expectation survey conducted by RBI showed that 77.2% of the respondents expected the prices in general will increase in three months. About 82.4% expected in general to rise in a year's time. Most expected the food prices to spiral more than other categories like non-food items, household durables, and housing prices. About 73.7% of the respondents expected food prices to escalate in three months and 75.8% of the respondents expected food prices to rise in 1 year.

Majority about 72% of the respondents expected the non-food prices to escalate in three months while 74% of the respondents expected the prices to escalate in one year. The rise in inflation expectations was reflected across all product groups, except housing. Only 64% of the respondents expected the housing prices to increase in three months' time and 73% expected housing prices to go up in one year's time.

RBI governor Patel said specific food items such as tomato exhibited sharp price pressures in recent weeks, which were not reflected in the low June 2017 inflation print. The present low level of food prices is unusual and is vulnerable to upward pressures.