Businesses’ Short- And Long-Term Term Inflation Expectations And Influences On Pricing Decisions

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 October 2015 BIE Survey dated October 16, 2015 (involving 225 firms responding):

Respondents indicated that, on average, they expect unit costs to rise 1.8 percent over the next 12 months. Inflation uncertainty went unchanged at 2.3 percent. Firms also report that, compared to this time last year, their unit costs are up 1.3 percent. Respondents’ sales levels, compared to what they consider normal conditions, declined, with approximately 55 percent of respondents indicating current sales levels are at or above normal. Profit margins were virtually unchanged, with roughly 53 percent of respondents indicating their profit margins are at or above normal.

This month’s “quarterly question” concerned “Long-term inflation expectations.”  An excerpt:

Over the long term—that is, per year over the next five to 10 years—respondents expect unit costs to increase 2.7 percent, on average, down one-tenth of a percentage point from the July reading. Respondents’ uncertainty (variance) regarding this expectation rose to 2.3 percent.

This month’s “special question” was the “Influence on pricing decisions,” and the main factors (depicted in a chart) included industry trends; labor costs; nonlabor costs; sales levels; rate of inflation; margin adjustments; and productivity.

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.