- One-year-ahead business inflation expectation rises to 3.97% even as CPI forecast drops sharply to 3.83%
- Cost pressures remain muted with fewer firms reporting significant increases; profit margin outlook strengthens
- Sales levels stay subdued for most firms between June–October, but profitability expectations improve
NE ECONOMIC BUREAU
AHMEDABAD, DEC 5
The Business Inflation Expectations Survey (BIES) for October 2025, conducted monthly by the Misra Centre for Financial Markets and Economy at IIM Ahmedabad, indicates a marginal uptick in inflation expectations even as CPI projections ease significantly.
Inflation Expectations
One-year-ahead business inflation expectation—measured as the mean of individual probability distributions of unit cost increase—rose by 18 basis points to 3.97% in October 2025 from 3.79% in September. Firms’ average inflation expectation over the past 12 months remained broadly anchored at 4.14%.
The uncertainty of business inflation expectations, captured through the square root of the average variance in cost projections, held steady at 1.90%, unchanged from September.
Respondents were also asked to project one-year-ahead CPI headline inflation through an additional probability-based question asked every alternate month. In October, businesses expect CPI inflation to be 3.83%, a sharp 44-basis-point decline from 4.27% in August. CPI inflation uncertainty fell to 0.87% from 0.95%.
Costs
Cost perceptions in October 2025 do not indicate rising cost pressures. The percentage of firms reporting “significant” or “very significant” cost increases (above 6%) declined marginally to 24%, compared with 25% in September.
Sales Levels
Between June and October 2025, more than 60% of firms reported sales “much less than normal” or “somewhat less than normal.”
The share of firms reporting “about normal” or higher sales remained unchanged at 38% during September–October 2025.
Profit Margins
Profitability expectations strengthened notably.
The percentage of firms reporting “about normal” or higher profit expectations rose sharply to 37% in October from 26% in September.
Improving profit expectations were primarily supported by easing cost pressures.
