Inflation Project

Business Inflation Expectations

The BIE was created to measure the year-ahead inflationary sentiments of businesses in the Sixth District. It also helps inform our view of the sources of cost changes and provides insight into the factors driving business' pricing decisions.

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Business Inflation Expectations Remain Relatively Unchanged at 2.9 Percent - May 2023

• Inflation expectations: Firms' year-ahead inflation expectations remain relatively unchanged at 2.9 percent, on average.
• Current economic environment: Sales levels "compared to normal" decreased. However, firms' profit margins "compared to normal" increased. Year-over-year unit cost growth remained relatively unchanged at 3.5 percent, on average.
• Quarterly question: Approximately 75 percent of firms expect both labor and nonlabor costs to place upward influence on prices. About 53 percent of firms expect sales levels to exert little or no influence on prices over the next 12 months. Approximately 50 percent of firms expect margin adjustment to have little or no influence on prices over the next 12 months.
• Special question: Firms were asked about their shares of low-skilled and high-skilled employees. They were also asked about their expected percentage change in their hourly average wage. A breakdown of the results can be found in the special question section below.

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