RBI Survey: Nearly 80% Participants Say Housing Prices Will Go Up
The Reserve Bank of India (RBI) recently released its survey on the Inflation Expectations Survey of Households that studied people’s opinion on inflation between May 2018 to May 2019. The survey was conducted across 18 cities.
Let us look at some key findings.
Prices in general
On the whole, Indian households expected a price rise. In May 2019, an estimated 78.3 per cent of participants felt that prices would increase. About 50 per cent said they would increase more than the current rate while 25.6 per cent participants said that price increase would be similar to the rate that existed in May 2018. Only 2.8 per cent of participants said that price increase would be less than what was at the existing rate. An optimistic 18.4 per cent said there would be no change in prices while 3.3 per cent of those who participated said prices may decline.
79.8 per cent of participants who said they expected prices to increase, in May 2018, held the same belief in May 2019. About 54.3 per cent of participants also expected prices to increase more than the inflation rates that existed in May 2018 while 21.9 per cent people felt that price increase may be similar to the rates in 2018.
Some 3.6 per cent also believe that there may be a price increase but it would be less than the current rate; 14.3 per cent said there would be no change in prices while 5.9 per cent felt there would be a decline in housing prices.
In 2018, 72.5 per cent felt prices would rise owing to inflation and by May 2019, 68.8 per cent expected prices to rise. Of the latter, 42.9 per cent of survey participants felt that prices would be up and more than the rate that prevailed in last year. Another 21.9 per cent felt that the rise could be at the same or similar rate. The survey suggests that four per cent felt prices could increase but at a rate lower than the prevailing one while an optimistic 21.5 per cent felt there would be no change in prices and another 9.7 per cent said they expected prices to decline.
On the whole, the majority expect prices to rise. Consumer inflation rate was highest in June 2018 at 4.92 per cent, the highest since May 2018 at 4.87 per cent and November 2017 at 4.88 per cent and much above the market expectations. By August 2018, it had fallen to 3.69 per cent. By June 2019, India’s retail price inflation rose to 3.18 per cent year on year.
Note: Financial sector employees, self-employed, homemakers, retired persons, daily workers and other employees took part in the survey.