Atlanta Fed Finds Business Inflation Expectations ‘Relatively Unchanged’ at 2.3%

Firms’ year-ahead inflation expectations remain “relatively unchanged” at 2.3%, on average, the Federal Reserve Bank of Atlanta said in a Wednesday (Aug. 20) press release about its August Business Inflation Expectations (BIE) Survey.

That figure is the same as the 2.3% recorded in the July BIE Survey and just above the 2.2% recorded in the August 2024 survey.

“Year-ahead unit cost expectations have fallen considerably since hitting a peak of 3.8 percent in April 2022 but remain somewhat elevated relative to their prepandemic average of 2.0 percent (from January 2017 through December 2019),” the Atlanta Fed said in the survey.

The August survey also found that the average year-over-year cost growth remained “relatively unchanged” at 2.3%; sales levels and profit margins “compared to normal” increased; and firms increased their prices by a median 4.0% over the last 12 months.

“Survey questions pertain to current, past and future outcomes at respondents’ firms,” the Atlanta Fed said in the survey. “Our primary objective is to elicit the respondent’s subjective forecast distributions over own-firm future unit-cost growth.”

The Cleveland Fed said Aug. 11 that the inflation expectations of CEOs and other top executives decreased in the third quarter.

Business leaders said in July that they expect inflation over the next 12 months to be 3.5%, according to the Cleveland Fed’s Survey of Firms’ Inflation Expectations (SoFIE). Three months earlier, in April, business leaders had forecast inflation at 3.9%.

“The Cleveland Fed reports these survey data because business leaders’ inflation expectations can influence the prices their firms charge customers, and these prices can, in turn, influence the path of inflation,” the Cleveland Fed said in an Aug. 11 press release.

Among consumers, on the other hand, there are “rising worries about inflation,” the University of Michigan’s Surveys of Consumers found in preliminary results for August.

Consumers’ year-ahead inflation expectations rose from 4.5% in July to 4.9% in August, while their long-run inflation expectations rose from 3.4% to 3.9%, according to the survey.

“This month ended two consecutive months of receding inflation for short-run expectations and three straight months for long-run expectations,” Surveys of Consumers Director Joanne Hsu wrote. “Still, both readings remain well below the highs seen briefly in April and May 2025.”