The Expected Inflation

CCI survey collects data on consumers’ expectation of price level. In the fourth quarter of 2017, the expectation of “increase in price level” in next 6 months has dominated (62.3 percent), while 20.9 percent of consumers expect no change in price level in next 6 months. However, 11 percent of consumers have the expectation of “do not know about changes in inflation” in this period. The percent of consumers who expected an increase in the price level increased dramatically while the percent of consumers who responded “do not know” decreased slightly compared to the fourth quarter of 2016 and the third quarter of 2017. As of the fourth quarter of 2017, the expected rate of inflation is estimated to be 3.3 and 3.4 percent in the next 6 months and the next year, respectively.

Figure 1. The expected inflation rate, in next 6 months and the next year

Sources: CCI survey and NSO web page 

The responses “expects an increase in price level” and “no change in it” in the next year are the highest (62.3 and 20.9 respectively). Alhtough, the response “do not know about a change in inflation in the next year” has dominated in the first two quarter of 2017, the percent of this response considerably decreased in the last two quarter.

In Ulaanbaatar, the expected inflation rates (3.1 percent in next 6 month, 3.1 percent in the next year) are slightly lower than that in rural areas (3.5 percent in next 6 months, 3.8 percent in the next year). In other words, the expectation in price level is different in terms of location.

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