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Modeling Consumers' Confidence and Inflation Expectations

Author

Listed:
  • Ashima Goyal

    (IGIDR)

  • Prashant Mehul Parab

    (PhD Research Scholar - Indira Gandhi Institute of Development Research)

Abstract

This study analyzes the socio-economic factors that influence inflation expectations of Indian households. Using Consumer Confidence Survey data we discover that inflation expectations of households depend largely on inflation perceptions, income, education of the respondents, and outlook on economy, employment and spending. Women, lower income individuals and less educated persons tend to have higher inflation expectations. Macroeconomic variables like inflation, repo rate and GDP growth rate influence inflation expectations positively. Along with these variables, inflation projections by the Reserve Bank of India play a pivotal role in influencing inflation expectations of households. A significant role of the Reserve Bank in anchoring inflation expectations via communications is visible from this analysis.

Suggested Citation

  • Ashima Goyal & Prashant Mehul Parab, 2019. "Modeling Consumers' Confidence and Inflation Expectations," Economics Bulletin, AccessEcon, vol. 39(3), pages 1817-1832.
    • Handle: RePEc:ebl:ecbull:eb-19-00571
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    Cited by:

    1. Sof'a Gallardo & Carlos Madeira, 2022. "The role of financial surveys for economic research and policy making in emerging markets," Chapters, in: Duc K. Nguyen (ed.), Handbook of Banking and Finance in Emerging Markets, chapter 36, pages 676-686, Edward Elgar Publishing.
    2. Carlos Medel, 2021. "Searching for the Best Inflation Forecasters within a Consumer Perceptions Survey: Microdata Evidence from Chile," Working Papers Central Bank of Chile 899, Central Bank of Chile.
    3. Gaurav Kumar Singh & Tathagata Bandyopadhyay, 2024. "Determinants of disagreement: Learning from inflation expectations survey of households," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 43(2), pages 326-343, March.

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    More about this item

    Keywords

    Consumer Confidence Survey; Demographics; Ordered Logit; Central Bank Communications;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • D1 - Microeconomics - - Household Behavior

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