Business Inflation Expectations Rise in India: Firms Gear Up for Higher Costs
Hey folks, if you’re keeping an eye on India’s economy, here’s some fresh news that’s got economists buzzing. Businesses in the country are now expecting inflation to nudge up a bit more next year. According to a latest report, companies predict a cost increase of 4.17 per cent over the coming year, that’s a slight jump from June’s 3.97 per cent. This comes from the Business Inflation Expectations Survey (BIES) conducted by the Indian Institute of Management Ahmedabad (IIM Ahmedabad).
The survey dives into what manufacturing firms think about costs, sales, and profits ahead. It shows that inflation expectations seem to have hit rock bottom and are now stabilizing. The 12-month average for business inflation expectations holds steady at 4.19 per cent, which is good news for steady economic vibes.
One interesting bit: More firms are feeling optimistic about profits. In July, 31 per cent of them reported "about normal" profit expectations, up from 28 per cent in June. Sales outlook looks brighter too, with 26 per cent of companies saying sales will be "about normal" in July, compared to 24 per cent last month.
But it’s not all smooth sailing. Uncertainty around these inflation expectations ticked up slightly to 1.94 per cent in July from 1.86 per cent in June. This measures how spread out firms’ predictions are on unit cost increases. Plus, a whopping 26 per cent of firms now expect moderate cost hikes between 3.1 and 6 per cent, higher than the 22 per cent from June. Overall, cost pressures in manufacturing are building up moderately.
The report also points out that over 60 per cent of respondents in June and July expect profits to be "somewhat less than normal" or even lower. This BIES survey helps policymakers track business inflation trends and complements key macro data for decisions. Most responses for this round came in during the second half of August 2025.
On a positive note, analysts believe recent GST rate cuts on capital goods and industrial inputs could ease manufacturing costs soon. This might help keep inflation in check.
Tying into this, India’s industrial growth is picking up steam. The Index of Industrial Production (IIP) data shows a solid 3.5 per cent rise in July, the highest in four months, fueled by a strong manufacturing sector. That’s a big leap from June’s 1.5 per cent growth. So, while businesses brace for higher costs, the economy shows resilience. Keep watching for more updates on India economy trends!
