31, July 2025

A Micro-econometric Analysis of Household Inflation Expectations in India: Adaptive or Rational? nal

VOLUME-9; ISSUE-7; JULY-2025

Author(s): Dr.Musthaf

Authors Affiliations:

Faculty in Economics and Principal Government P.U College, Harekala (Hajabba), Ullala Taluk and Dakshina Kannada District, Karnataka- 574199

DOIs:10.2017/IJRCS/202507029     |     Paper ID: IJRCS202507029


Abstract
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This study examines the nature of household inflation expectations in India using the Reserve Bank of India’s (RBI) Inflation Expectations Survey of Households (IESH) for May 2025. The research investigates whether expectations follow adaptive or rational patterns by analyzing trends across demographics, product categories, and time horizons. Employing micro-econometric techniques, including ordered probit and regression models, the study finds that Indian households predominantly exhibit adaptive expectations, with food prices being a significant driver. Short-term expectations remain sticky, while long-term expectations show slight moderation. The findings highlight the need for enhanced monetary policy communication to improve inflation anchoring.

Inflation Expectations, adaptive expectations, monetary policy, micro-econometrics

Dr.Musthaf (2025); A Micro-econometric Analysis of Household Inflation Expectations in India: Adaptive or Rational?,  International Journal of Research Culture Society,    ISSN(O): 2456-6683,  Volume – 9,   Issue –  7,  Pp.185-193.        Available on – https://ijrcs.org/

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