<p>Recent literature establishes signs of improvement in the anchoring of households’ inflation expectations in India after the implementation of flexible inflation targeting. This paper attempts to study the anchoring of expectations across geographical regions and compares the results between the pre-Covid and post-Covid periods. It tests the sensitivity of expectations towards inflation and estimates the time-varying trend in the expectations. It also tests the anchoring in expectations with respect to food and fuel shocks. The paper finds that the sensitivity of expectations to inflation, is significant in the northern and southern regions. Disagreements amongst the households in all the regions, except western region, increased. Inflation expectations in all the regions became less anchored after the pandemic. Given disperse findings across regions, a focused approach is required to contain inflation to anchor expectations.</p>

错误:搜索内容不能为空,请输入英文关键词
错误:关键词超出字数限制,请精简
高级检索

Impact of Covid on Regional Inflation Expectations in Urban India

  • Purnima Shaw

摘要

Recent literature establishes signs of improvement in the anchoring of households’ inflation expectations in India after the implementation of flexible inflation targeting. This paper attempts to study the anchoring of expectations across geographical regions and compares the results between the pre-Covid and post-Covid periods. It tests the sensitivity of expectations towards inflation and estimates the time-varying trend in the expectations. It also tests the anchoring in expectations with respect to food and fuel shocks. The paper finds that the sensitivity of expectations to inflation, is significant in the northern and southern regions. Disagreements amongst the households in all the regions, except western region, increased. Inflation expectations in all the regions became less anchored after the pandemic. Given disperse findings across regions, a focused approach is required to contain inflation to anchor expectations.