Household Inflation Expectations Rise Amid West Asia Conflict, Monsoon Concerns: RBI

New Delhi, Jun 6 (KNN) Indian households expect inflationary pressures to increase over the coming months amid concerns over the ongoing West Asia conflict and forecasts of a below-normal monsoon, according to surveys released by the Reserve Bank of India (RBI) on Friday.

Household Inflation Expectations Move Higher

The RBI's Inflation Expectations Survey of Households, conducted between May 2 and 11 across 19 major cities, showed a rise in both current inflation perceptions and future inflation expectations.

According to the survey, households' perception of current inflation increased by 60 basis points. Inflation expectations for the next three months rose by 80 basis points, while expectations for the one-year ahead period increased by 50 basis points.

The RBI noted that in such surveys, the direction of movement is generally considered more significant than the absolute level of responses, reported Business Standard.

The survey findings were released on the same day that the RBI's Monetary Policy Committee decided to keep the policy repo rate unchanged at 5.25 percent, citing uncertainty over whether current inflationary pressures could become more broad-based.

Consumer Confidence Weakens In Urban Areas

Separate RBI surveys also indicated weakening consumer sentiment in both urban and rural areas.

In urban regions, consumer confidence declined for the third consecutive survey round. The central bank attributed the deterioration largely to weaker sentiment regarding household spending, particularly discretionary expenditure.

Expectations for the year ahead also moderated compared to the previous survey round.

Rural consumer confidence similarly weakened during the current period, with respondents reporting worsening conditions across most parameters except prices.

Monsoon And Geopolitical Risks Add To Concerns

RBI Governor Sanjay Malhotra, speaking after the monetary policy announcement, observed that a deficient monsoon could adversely affect agricultural output and rural consumption, adding to existing economic uncertainties.

The surveys suggest that rising inflation concerns, geopolitical developments and weather-related risks are influencing household sentiment and spending expectations across the country.

(KNN Bureau)