Mumbai: The business inflation expectations survey ,BIES) provides ways to check the amount of slack economy By polling a panel of business leaders about them inflation expectations In the short and medium term.
this monthly survey Asks questions about year-ahead cost expectations and factors affecting price changes, such as profits, sales levels, etc. The survey is unique in that it goes directly to businesses – the price setters – rather than consumers or households, to understand them. Expectations of changes in the price level.
A major advantage of the BIES is that one can obtain a probabilistic assessment of inflation expectations and thus a measure of uncertainty. It also provides an indirect assessment of the overall demand position of the economy. Therefore, the results of this survey are useful in understanding inflation expectations of businesses and complement other macro data needed for policy making. With this objective, BIES is organized monthly at the Mishra Center for Financial Markets and Economy, IIMA.
The companies are selected primarily from the manufacturing sector. “BIES – December 2023” is the 80th round of the survey, starting from May 2017. These results are based on responses from nearly 1000 companies.
Inflation expectations One year ahead business inflation expectations, as estimated from the mean of the individual probability distribution of unit cost growth, have increased by 54 basis points from 4.04% reported in November 2023 to 4.58% in December 2023 . The average inflation expectation of firms has been operating at around 4.3% for the last six consecutive months. The uncertainty of trade inflation expectations in December 2023, as captured by the square root of the average variation of the individual probability distribution of unit cost growth, declined sharply to 1.88% from 2.0% reported in November 2023.
Respondents were also asked to estimate CPI headline inflation one year ahead through an additional question using a probability distribution. This question is repeated every second month, which coincides with the month of RBI's bi-monthly monetary policy announcement. Businesses expect one-year-ahead CPI headline inflation to be 4.96% in December 2023, 23 basis points higher than the 4.73% reported in October 2023, with a relatively small standard deviation of 0.88%.
Cost perception data indicates increased cost pressures in December 2023.
The percentage of companies experiencing significant cost increases (more than 6%) in December 2023 has increased to 33% from about 29% reported during October-November 2023. However, the percentage of companies reporting moderate cost increases has increased (from 3.1% to 6.0%). In December 2023 it was around 29%. Nearly 23% of companies are reporting 'slightly above normal' sales in December 2023 – up from 19% reported in November 2023. About 57% of companies are reporting 'normal' or above sales in December 2023 – significantly higher than the 46% reported in November 2023.
About 48% of companies are reporting profit margins at or above 'about normal' in December 2023 – significantly higher than the 43% reported in November 2023. Overall, profit margin expectations have improved significantly.
this monthly survey Asks questions about year-ahead cost expectations and factors affecting price changes, such as profits, sales levels, etc. The survey is unique in that it goes directly to businesses – the price setters – rather than consumers or households, to understand them. Expectations of changes in the price level.
A major advantage of the BIES is that one can obtain a probabilistic assessment of inflation expectations and thus a measure of uncertainty. It also provides an indirect assessment of the overall demand position of the economy. Therefore, the results of this survey are useful in understanding inflation expectations of businesses and complement other macro data needed for policy making. With this objective, BIES is organized monthly at the Mishra Center for Financial Markets and Economy, IIMA.
The companies are selected primarily from the manufacturing sector. “BIES – December 2023” is the 80th round of the survey, starting from May 2017. These results are based on responses from nearly 1000 companies.
Inflation expectations One year ahead business inflation expectations, as estimated from the mean of the individual probability distribution of unit cost growth, have increased by 54 basis points from 4.04% reported in November 2023 to 4.58% in December 2023 . The average inflation expectation of firms has been operating at around 4.3% for the last six consecutive months. The uncertainty of trade inflation expectations in December 2023, as captured by the square root of the average variation of the individual probability distribution of unit cost growth, declined sharply to 1.88% from 2.0% reported in November 2023.
Respondents were also asked to estimate CPI headline inflation one year ahead through an additional question using a probability distribution. This question is repeated every second month, which coincides with the month of RBI's bi-monthly monetary policy announcement. Businesses expect one-year-ahead CPI headline inflation to be 4.96% in December 2023, 23 basis points higher than the 4.73% reported in October 2023, with a relatively small standard deviation of 0.88%.
Cost perception data indicates increased cost pressures in December 2023.
The percentage of companies experiencing significant cost increases (more than 6%) in December 2023 has increased to 33% from about 29% reported during October-November 2023. However, the percentage of companies reporting moderate cost increases has increased (from 3.1% to 6.0%). In December 2023 it was around 29%. Nearly 23% of companies are reporting 'slightly above normal' sales in December 2023 – up from 19% reported in November 2023. About 57% of companies are reporting 'normal' or above sales in December 2023 – significantly higher than the 46% reported in November 2023.
About 48% of companies are reporting profit margins at or above 'about normal' in December 2023 – significantly higher than the 43% reported in November 2023. Overall, profit margin expectations have improved significantly.