Modeling Consumers' confidence and Inflation expectations

Ashima Goyal and Prashant Parab ()
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Prashant Parab: Indira Gandhi Institute of Development Research

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: Using consumer confidence survey data we analyze socio-economic as well as macroeconomic factors that influence inflation expectations of Indian households. We discover that inflation expectations of households depend largely on inflation perceptions, income and education of the respondents, as well as their outlook on the 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, Reserve Bank of India inflation projections influence inflation expectations. Therefore, the Reserve Bank has a significant role in anchoring inflation expectations via communications. Since a rise in Repo, as well as lower growth, raise inflation expectations, it must also give weight to growth under inflation targetting.

Keywords: Consumer Confidence Survey; Inflation expectations; Socio-economic variables; Ordered Logit; Central Bank Communications (search for similar items in EconPapers)
JEL-codes: C30 D83 D84 E52 E58 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-07
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (3)

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Journal Article: Modeling Consumers' Confidence and Inflation Expectations (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2019-025

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