RBI survey: As actual consumer price inflation goes down, Mumbai perceives acceleration

This round of RBI’s survey studied 5,150 urban households across 18 different cities and various occupational categories. (Express Photo by Pradip Das)

While actual consumer price inflation is declining, Mumbai residents’ perception is that it is accelerating, shows the March round of inflation expectations survey conducted by the Reserve Bank of India (RBI). But it expects one-year ahead inflation to rise at a slower rate compared to residents in other cities. This round of RBI’s survey studied 5,150 urban households across 18 different cities and various occupational categories.

According to the survey, the average Mumbai resident thought the inflation rate in March was 8 per cent compared to 7.6 per cent in the December round. While that was not as low as the 5.4 per cent perceived by Raipur residents, it was also not as high as 11.4 per cent recorded in Guwahati. These are the median numbers for each city. The actual retail inflation decelerated for a fourth consecutive month to hit 4.28 per cent in March, data from the Central Statistics Office showed. At the all-India level, however, the average urban resident felt that inflation in March had accelerated to 7.2 per cent.

Across India, most urban households expected inflation to rise in the months ahead. Mumbaikars expect inflation in June to rise to 8.1 per cent. It is ahead of RBI’s April-September inflation projection of 4.7-5.1 per cent. Guwahati residents expect June inflation to be as high as 10.2 per cent, the highest among all cities surveyed.

Mumbai residents expect inflation a year ahead (i.e. March 2018) to reach 8.7 per cent. Ahmedabad residents had the highest expectations at 10.5 per cent. The most optimistic were Bengaluru residents at 4.9 per cent. At an all-India level, the number was 8.6 per cent, a marginal increase from the 8.5 per cent, seen in the December survey.
The increase comes even as the RBI’s monetary policy committee cut its inflation projections for the first half of the current fiscal to 4.7 – 5.1 per cent and 4.4 per cent for the second half. The rate committee, however, left the policy rate unchanged at 6 per cent, citing upward risks.