Recent findings from the Reserve Bank of India (RBI) indicate a notable shift in household perceptions of inflation. According to the latest Inflation Expectations Survey of Households (IESH), there is a reported easing of price pressures across various sectors.
The survey, conducted from August 28 to September 6, 2025, revealed that while households’ expectations for price hikes in essential categories have moderated, their current perception of inflation has slightly increased. The survey covered 19 major cities and garnered responses from 6,082 participants.
As per the survey’s results, there has been a slight uptick in the median inflation perception, which rose by 20 basis points to reach 7.4 percent, compared to the findings from the previous round.
Nevertheless, short-term inflation expectations have witnessed a decline. Expectations over the coming three months decreased by 20 basis points to 8.1 percent, and one-year ahead predictions fell by 30 basis points to 8.7 percent, suggesting that households are less concerned about immediate inflationary pressures.
Interestingly, the proportion of respondents anticipating a general increase in prices for both short-term and one-year durations has diminished compared to the last survey. In terms of product categories, 77.8 percent of respondents expected prices to rise in the next three months, a decrease from 79.5 percent observed previously.
Furthermore, the survey indicates that 86.8 percent of households foresee price increases over the next year, which is down from 88.1 percent in the earlier survey. These findings suggest a gradual shift in sentiment regarding future inflation among households in India.
When examining the data across different age groups, younger respondents, particularly those aged 25 and below, reported the lowest current perception of inflation at 7.0 percent. In contrast, households aged 60 and above indicated a higher perception of inflation at 7.9 percent. Among the surveyed cities, Kolkata stood out with the highest current inflation perception at 10.5 percent, followed by Mumbai at 8.5 percent and Delhi at 8.0 percent.
The RBI clarified that this survey is primarily designed to capture directional insights into how households view inflation, which is influenced by their consumption habits. However, it is essential to note that the findings do not necessarily align with the central bank’s official assessment of inflation trends.
This evolving perspective on inflation is crucial as it reflects the economic sentiment among households, which can influence spending habits and, consequently, the broader economy. The RBI’s ongoing monitoring of these perceptions plays a vital role in shaping its monetary policy and ensuring financial stability in the country.
As India continues to navigate the complexities of its economic landscape, understanding the factors influencing inflation perceptions will be essential for policymakers and economists alike. The insights from the IESH help illuminate the challenges households face in managing their finances amid fluctuating prices and economic pressures.
