Mumbai: Indian inflation expectations eased for the first time since May 2021 as households expect price increases to be moderate in the near- to medium-term, a survey showed after the Reserve Bank of India kept borrowing costs steady to support economic growth.
Current inflation expectations dropped by 70 basis points to 9.7% in January, according to the median in the RBI survey of 5,985 urban households. The three-month and one-year ahead expectations also declined by 170 and 190 basis points, respectively.
The sharp drop in price perceptions come despite jobs and incomes taking a hit from the pandemic and global crude oil hovering near a seven-year high. The share of respondents expecting higher inflation has significantly reduced from November 2021, the survey said.
The RBI’s interest-rate panel on Thursday cited a benign inflation outlook for keeping monetary policy accommodative for as long as necessary to support economic growth, although consumer price-growth is currently hovering close to the central bank’s 6% upper tolerance limit.
Governor Shaktikanta Das said despite hardening of oil prices and sticky core inflation the transmission of input cost pressures to selling prices remained muted due to a slack in demand. “Further, as risks from omicron wane and supply chain pressures moderate, there could be some softening of core inflation,” Das said, pegging inflation next fiscal at 4.5% from 5.3% this year.
A separate survey showed Indian consumer sentiment continued to improve from a historic-low recorded in July 2021 as economic recovery gathered pace.-Bloomberg
Also read: Why Federal Reserve should keep steady despite surge in inflation