NO : WP-2026-016
AUTHOR : Roshin Paul P and Taniya Ghosh
TITLE : Can Simple Information Update Inflation Expectations? Evidence from an Indian Household Survey
ABSTRACT :
Using an original household survey of 1,010 urban households across Delhi, Mumbai, Chennai, and Kolkata, we study Indian households’ awareness of official inflation statistics and estimate the causal impact of monetary policy communications on their expectations. The study reveals that majority of respondents are unaware of current Consumer Price Index (CPI) inflation rate and the Reserve Bank of India’s inflation target in line with the findings observed in some advanced countries as well. However, providing simple information on either the RBI’s 4% inflation target or the prevailing CPI inflation rate through a randomized control trial lowers respondents’ one-year-ahead inflation expectations by 2.3–2.5 percentage points and fiveyears- ahead expectations by a similar or slightly larger magnitude, an effect notably larger than found in the literature for advanced economies, while significantly reducing expenditure expectations by approximately 1.4–1.5 percentage points. Importantly, income and savings expectations show no significant treatment response, mirroring the effects documented in comparable experiments, implying that households’ revision of price-related beliefs does not extend to all financial expectations. Further, female, lower-income and less-educated respondents, who hold the most elevated inflation expectations, respond more strongly to clear, accessible information, underscoring the potential of targeted, vernacular-language communication in improving economic understanding and shaping expectations.
Keywords: Cross Sectional Survey; Communication; Expectations; Inflation; Inflation Targeting; Monetary Policy
JEL Code: C83, D84, E31, E52
Weblink: http://www.igidr.ac.in/pdf/publication/WP-2026-016.pdf
