Mumbai: The 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.
This monthly survey 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.
One major advantage of BIES is that one can get a probabilistic assessment of inflation expectations and thus get a measure of uncertainty. It also provides an indirect assessment of overall demand condition of the economy. Results of this Survey are, therefore, useful in understanding the inflation expectations of businesses and complement other macro data required for policy making. With this objective, the BIES is conducted monthly at the Misra Centre for Financial Markets and Economy, IIMA.
Companies are selected primarily from the manufacturing sector. Starting in May 2017, the “BIES – December 2023” is the 80th round of the Survey. These results are based on the responses of around 1000 companies.
Inflation expectation is that one year ahead business inflation expectation, as estimated from the mean of individual probability distribution of unit cost increase, has increased significantly by 54 basis points to 4.58% in December 2023 from 4.04% reported in November 2023. Average inflation expectation of the firms for the past six consecutive months works out to be around 4.3%. The uncertainty of business inflation expectations in December 2023, as captured by the square root of the average variance of the individual probability distribution of unit cost increase, declined sharply to 1.88% from 2.0% reported in November 2023.
Respondents were also asked to project one year ahead CPI headline inflation through an additional question using a probability distribution. This question is repeated every alternate month, coinciding with the month of RBI’s bi-monthly monetary policy announcement. Businesses in December 2023 expect one year ahead CPI headline inflation to be 4.96%, up by 23 basis points from 4.73% reported in October 2023, with a relatively low standard deviation of 0.88%.
The cost perceptions data in December 2023 indicate increase in cost pressures.
The percentage of firms perceiving significant cost increase (over 6%) in December 2023 has increased to 33% from around 29% reported during October-November 2023. However, the percentage of firms reporting moderate cost increase (3.1% to 6.0%) has remained around 29% in December 2023. About 23% of the firms are reporting ‘somewhat greater than normal’ sales in December 2023 – up from 19% reported in November 2023. About 57% of the firms are reporting ‘normal’ or greater sales in December 2023 – significantly up from 46% reported in November 2023.
Around 48% of the firms in December 2023 are reporting profit margins to be ‘about normal’ or greater – significantly up from 43% reported in November 2023. Overall, the profit margins expectations have notably improved.
This monthly survey 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.
One major advantage of BIES is that one can get a probabilistic assessment of inflation expectations and thus get a measure of uncertainty. It also provides an indirect assessment of overall demand condition of the economy. Results of this Survey are, therefore, useful in understanding the inflation expectations of businesses and complement other macro data required for policy making. With this objective, the BIES is conducted monthly at the Misra Centre for Financial Markets and Economy, IIMA.
Companies are selected primarily from the manufacturing sector. Starting in May 2017, the “BIES – December 2023” is the 80th round of the Survey. These results are based on the responses of around 1000 companies.
Inflation expectation is that one year ahead business inflation expectation, as estimated from the mean of individual probability distribution of unit cost increase, has increased significantly by 54 basis points to 4.58% in December 2023 from 4.04% reported in November 2023. Average inflation expectation of the firms for the past six consecutive months works out to be around 4.3%. The uncertainty of business inflation expectations in December 2023, as captured by the square root of the average variance of the individual probability distribution of unit cost increase, declined sharply to 1.88% from 2.0% reported in November 2023.
Respondents were also asked to project one year ahead CPI headline inflation through an additional question using a probability distribution. This question is repeated every alternate month, coinciding with the month of RBI’s bi-monthly monetary policy announcement. Businesses in December 2023 expect one year ahead CPI headline inflation to be 4.96%, up by 23 basis points from 4.73% reported in October 2023, with a relatively low standard deviation of 0.88%.
The cost perceptions data in December 2023 indicate increase in cost pressures.
The percentage of firms perceiving significant cost increase (over 6%) in December 2023 has increased to 33% from around 29% reported during October-November 2023. However, the percentage of firms reporting moderate cost increase (3.1% to 6.0%) has remained around 29% in December 2023. About 23% of the firms are reporting ‘somewhat greater than normal’ sales in December 2023 – up from 19% reported in November 2023. About 57% of the firms are reporting ‘normal’ or greater sales in December 2023 – significantly up from 46% reported in November 2023.
Around 48% of the firms in December 2023 are reporting profit margins to be ‘about normal’ or greater – significantly up from 43% reported in November 2023. Overall, the profit margins expectations have notably improved.
Denial of responsibility! Chronicles Live is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – chronicleslive.com. The content will be deleted within 24 hours.