Households expecting higher inflation affects bank savings: RBI paper

Sentiment shapes consumption patterns, savings: RBI paper

When expectations around future inflation are on the higher side, households change their savings portfolio with respect to bank deposits, according to a working paper released by the Reserve Bank of India (RBI) on Tuesday.

Inflation expectations play a vital role in regulating households’ consumption behaviour and consequent savings, said the paper titled ‘Taking Cognisance of Households’ Inflation Expectations in India’.

The paper is authored by Devendra Pratap Singh, Aditya Mishra and Purnima Shaw of the RBI. The findings of the paper are of the authors and not of the RBI, the authors said.