Inflation Outlook 2025: Indian Households See Price Pressures Cooling, RBI Survey Reveals

Indian households are beginning to sense a breather from persistent inflation, with the Reserve Bank of India’s latest survey pointing to a moderation in future price expectations. According to the September

2025 round of the Inflation Expectations Survey of Households (IESH), families across 19 major cities expect inflationary pressures to ease over the next three months and one year, despite a marginal uptick in their perception of current price levels.Current vs Future Inflation ExpectationsThe survey, conducted between August 28 and September 6, 2025, covered 6,082 households. It found that the median perception of current inflation edged higher by 20 basis points to 7.4%, compared to the previous round.However, the outlook is more encouraging:

• Three-month inflation expectations dropped to 8.1%, down from 8.3%.
• One-year expectations softened to 8.7%, a decline of 30 basis points from 9.0%.
• The share of respondents anticipating sharper price rises also fell across both short- and medium-term horizons.

Product-Wise TrendsThe cooling trend was visible across key categories:

• Food & non-food products: Households expect slower increases compared to earlier rounds.
• Housing and services: Respondents also reported easing pressures, reflecting stabilisation in rents and service costs.

Despite the moderation, inflation expectations remain elevated compared to the RBI’s medium-term target of 4%.Who Feels Inflation the Most?The survey revealed interesting demographic and regional differences:

• Younger households (below 25 years) reported the lowest inflation perception at 7.0%.
• Senior households (above 60 years) saw inflation much higher, at 7.9%, reflecting heavier sensitivity to essential spending.
• Among cities, Kolkata recorded the highest inflation perception at 10.5%, followed by Mumbai (8.5%) and Delhi (8.0%).

What This Means for PolicyWhile households see price pressures moderating, the RBI cautioned that the IESH reflects consumer sentiment based on spending patterns, not the central bank’s official inflation projection. Nonetheless, a downward trend in household expectations can provide comfort to the Monetary Policy Committee (MPC), which has held interest rates steady in recent meetings while balancing inflation control with growth momentum.Economists believe that if easing inflation expectations persist, the RBI could find more room to maintain its pause-and-watch stance or even consider a rate cut in the coming quarters.