The year-ahead inflation expectations of businesses were 1.8 percent in February, according to the Federal Reserve Bank of Atlanta’s most recent business inflation expectations (BIE) survey. The survey was conducted February 8-12, with 215 firms responding to questions about their business conditions and inflation outlook. The results are summarized below.

Year-ahead inflation expectations and current conditions

Respondents indicated that, on average, they expect unit costs to rise 1.8 percent over the next 12 months. Inflation uncertainty rose to 2.3 percent. Firms also report that, compared to this time last year, their unit costs are up 1.2 percent. Respondents’ sales levels, compared to what they consider normal conditions, were virtually unchanged, with approximately 59 percent of respondents indicating current sales levels are at or above normal. Profit margins were also stable, with roughly 55 percent of respondents indicating their profit margins are at or above normal.

Quarterly question: Factors influencing price change

Seventy percent of respondents indicated that labor costs will put moderate or strong upward pressure on their prices over the next 12 months. Respondents’ expectations regarding the influence of nonlabor costs on prices declined from the last measure in November, with 54 percent of respondents indicating upward price pressure. Thirty-three percent of respondents expect sales levels to put moderate or strong upward pressure on prices in the year ahead, down from the November measure. The majority of firms expect productivity and margin adjustments to have little or no influence over prices in the next 12 months.

Special question

The question asked respondents to indicate whether they are experiencing a higher number of employee retirements in the last 12 months compared to what is normal for their firm. 

Approximately 22 percent of respondents said they are experiencing a higher number of retirements. Those respondents received a follow-up question asking them to indicate how this has affected their firm’s overall wage bill and productivity.