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IIM-A survey gives bleak picture of economy as business inflation expectations rise sharply to 4.5%

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.

By: Express News Service | Ahmedabad |
Updated: October 4, 2018 4:13:30 am
iimcal.ac.in, IIM-Ahmedabad, IIM Bangalore, IIM Calcutta, Indian Institute of Management Calcutta, Financial Times Survey The monthly survey’s findings, released on Wednesday, stated, the “one year ahead business inflation expectations” increased sharply to 4.5 per cent in August 2018 from 3.8 per cent in July 2018.

A survey by the Indian Institute of Management-Ahmedabad (IIMA) has found sharp increase in the business inflation expectations, hinting at tough economic condition.

The monthly survey’s findings, released on Wednesday, stated, the “one year ahead business inflation expectations” increased sharply to 4.5 per cent in August 2018 from 3.8 per cent in July 2018.

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, stated an official release from the B-school.

In the survey where about 1,600 firms — mostly from the manufacturing sector — were sampled in August, about 70 per cent of them reported that increase in costs has been more than three per cent. Meanwhile, the number of firms reporting “normal or above normal” profit has been gradually declining during the last three months, stated the release.

“The survey is unique as it goes straight to businesses, price setters, rather than to consumers or households, to understand their expectations of the price level changes. One major advantage of the BIES is that one can get a probabilistic assessment of inflation expectations and thus can get a measure of uncertainty. It also provides an indirect assessment of overall demand condition of the economy,” the release added about the survey.

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