IIMA releases Business Inflation Expectations Survey for May 2023

Hyderabad: The Misra Centre at the Indian Institute of Management Ahmedabad (IIMA), released the Business Inflation Expectations Survey (BIES Survey) for the month of May 2023.The BIES Survey is the only business inflation survey to be published in India since May 2017 and has contributed to effective monetary policy formulation by providing valuable insights which have been referred to by various policy makers, government, and industry. It is authored by Professor Abhiman Das.

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.

Key messages of May 2023 survey are as follows: Average inflation expectations of the firms reverted to below 4 per cent for the first time since October 2020, One year ahead business inflation expectation declined sharply by 44 basis points to 3.87 per cent in May 2023, from 4.31 per cent reported in April 2023, Sales expectations of the reporting firms have relatively improved. However, over 57 per cent of the firms are still reporting ‘much less than normal’ or ‘somewhat less than normal’ sales in May 2023.

Companies are selected primarily from the manufacturing sector. Starting in May 2017, the BIES – May 2023 is the 73rd round of the Survey. These results are based on the responses of around 1000 companies.