Business Expectations Regarding Inflation Expectations & Year-Ahead Prices

The Federal Reserve Bank of Atlanta publishes a monthly report titled “Business Inflation Expectations” (BIE) that contains statistics from a survey of regional businesses’ views on various factors that impact profitability.  These factors include unit costs, unit cost expectations, sales levels, profit margins, and other factors.

As described on the site:

Approximately 300 panelists receive the survey each month. Panelists represent businesses of various sizes headquartered within the Sixth District, which encompasses Alabama, Florida, Georgia, and sections of Louisiana, Mississippi, and Tennessee. Panelists range from executives of large corporations to owner-operators of small businesses. The industry composition of the panel roughly reflects the makeup of the national economy. Nevertheless, survey responses are weighted by industry shares of national gross domestic product.

An excerpt from the December 2014 BIE Survey dated December 19, 2014 (involving 201 firms responding):

Respondents indicated that, on average, they expect unit costs to rise 1.9 percent over the next 12 months.  Inflation uncertainty was unchanged at 2.4 percent. Firms also report that, compared to this time last year, their unit costs are up 1.7 percent. Respondents’ sales levels, compared to what they consider “normal” conditions, remained steady, with 59 percent of respondents indicating current sales levels are at or above normal. Profit margins were virtually unchanged, with roughly 48 percent of respondents indicating their profit margins are at or above normal.

This month’s “quarterly question” concerned “Percent above/below normal sales levels.”

This month’s “special question” concerned “Year-ahead change in average price.”  As seen in the report:

The median year-ahead price change expectation was 2.9 percent, and the mean expectation was 4.5 percent. Firms, on average, are assigning a small chance that their prices will rise significantly next year.  Otherwise, price adjustments are expected to be more modest. Moreover, on average, respondents were more uncertain about their average price change expectations than their unit cost change expectation, as reflected by the average individual’s variance of 4.7 and 2.4, respectively.

The report also includes a variety of charts and tables depicting respondents’ answers.


StratX, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

—– is published by StratX, LLC (  StratX, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.