Households’ inflation expectations jump 60 bps in May, finds RBI survey

The bi-monthly data of the Reserve Bank of India’s Inflation Expectations Survey of Households (IESH) for May 2026 showed that the current median inflation perception of households rose by 60 basis points to 7.8% from 7.2% in March.

The data comes on the day of the monetary policy where the RBI kept interest rates unchanged but revised its inflation forecast upwards to 5.1% for FY27 from 4.6% previously projected. Inflation for Q3FY27 is expected to touch 5.9%, just near the uppermost level—of 6%—of the RBI’s retail inflation tolerance band.

But experts say that if retail inflation does inch to 6% it does not necessarily mean that the RBI will immediately raise interest rates. The decision to hike rates will be data-led; the RBI will be watchful and if the central bank sees that inflation is getting generalised and building into expectations, it will take action.

Before the next policy is announced on August 5, the RBI will have inflation data from June to look at (to be released mid-July). It would also get clarity on crude oil price trends and whether rainfall from the monsoon is orderly.

Food inflation prices in the CPI are a more accurate data point for the RBI to decide on interest rate action. But the IESH gives a perception of the percentage of people who believe how inflation could move, product wise.

The IESH survey was conducted during May 2-11, 2026, in 19 major cities, with 5,936 responses. Their inflation expectations for the next three months and one year edged up by 80 bps and 50 bps, respectively, reaching 9.3% for both the three-month and one-year horizons.

At the short-term horizon, the proportion of respondents anticipating higher general prices and inflation inched up; a similar trend was observed across the product groups.

The IESH data had reached an all-time high of 16% in September 2014 and a record low of 7.9% in July 2019, according to global macroeconomic and financial market data platform CEIC.

On Friday, the RBI announced several policy measures to boost capital inflows into India, in a move seen to boost support for the rupee and put an end to the growing chatter surrounding their inability to protect the currency.