Household inflation expectations are maturing in India
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The rise in MPCE by 2.5x in a decade needs to be seen against inflation clocking higher than 6.0% in 6 of the 11 years, demonetization in 2016 and a once in a lifetime event of a pandemic in 2020. We find evidence of household inflation expectations maturing in India, with: Correlation of non-core inflation with inflation expectations witnessing a sizeable moderation. Since 2011-12, on a CAGR basis, growth in rural MPCE has surpassed that of urban counterpart – a reversal in the trend from preceding decade Share of food in total MPCE continued to decline as per the 2022-23 survey. For rural and urban households, the share fell below 50% and 40% respectively for the first time. Among major states, Tamil Nadu, Bihar, Orissa, Karnataka, Andhra Pradesh, Uttar Pradesh have seen growth in MPCE for both rural and urban households top all-India average pace