Business Inflation Expectation Falls to 4.21% in July: IIMA Survey

Hyderabad: Business inflation expectation has declined sharply by 29 basis points to 4.21 per cent in July 2024 from 4.50 per cent reported in June 2024, according to a business inflation expectation survey conducted by Institute of Management Ahmedabad (IIMA) recently.

The cost perceptions data in July 2024 indicate moderation in cost pressures, although the percentage of firms perceiving very significant cost increase (over 10 per cent) has increased marginally to 15 per cent, from around 13 per cent reported in June 2024.

The survey 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.

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.

About 64 per cent of the firms are reporting ‘somewhat less than normal’ or lower profits in July 2024, further up from 59 per cent reported during May-June 2024 the profit margins expectations remained subdued in July 2024.