The Reserve Bank of India will soon start undertaking inflation expectation survey, its Governor Y V Reddy said on Friday. He, however, did not elaborate.
Among factors that influence inflation are people's expectations about price rise and central banks in the developed world routinely conduct inflation expectation surveys to gauge the sentiments of people, he explained.
They are not foolproof though, and at best can act only as an additional tool. Reddy said there were not many professional forecasters and the RBI would also make use of data available from the financial markets for the purpose.
Prof Axel Weber, president of the Deutsche Bundesbank, who delivered an address at the RBI headquarters in Mumbai on monetary policy strategy in Europe and made reference to the concept, said consumers could more easily give their expectation about prices of goods they consume daily but not about products, which they do not use frequently.
There has been a strong recovery in the world economy with credit to the private sector growing at record level, Weber said. There is an ample liquidty in the system that entails risk of rising inflation, he observed.
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