IIM Ahmedabad’s Business Inflation Expectations Survey (BIES) provides ways to examine the amount of slack in the economy by polling a panel of business leaders about their inflation expectations in the short and medium term.
The November issue asks questions about year-ahead cost expectations and the factors influencing price changes, such as profit, sales levels, etc. The survey is unique in that it goes straight to businesses, the price setters, rather than to consumers or households, to understand their expectations of the price level changes.
According to the survey, business inflation expectation in November 2018 has increased to 3.86 per cent from 3.66 per cent observed in October 2018. The uncertainty of business inflation expectation in November 2018 has remained elevated at 2.24 per cent.
The proportion of firms perceiving significant cost increase has remained same at 34 per cent in November 2018, with regard to cost perceptions.
Nearly 3/5th of the firms reported that sales are ‘somewhat or much less than normal’ in November 2018 and this proportion has seen a rise in the last two months. The overall results suggest benign inflation expectations and subdued demand conditions.