The lowest level since July 2017
the Atlanta Fed business inflation expectations declined to 1.7% in February down from 1.9% in January. In their words:
- Inflation expectations: Firms’ year-ahead inflation expectations declined to 1.7 percent, on average.
- Current economic environment: Sales levels and profit margins compared to “normal times” were virtually unchanged over the month. Year-over-year unit cost growth fell by 1.5 percent, on average.
- Quarterly question: The majority of firms expect labor costs and nonlabor costs to put moderate upward pressure on prices over the next 12 months.
- Special question: Firms indicated whether they provide annual merit increases to their full-time employees and, if so, whether these increases incorporate the rate of inflation or cost-of-living adjustments. If they indicated the rate of inflation or a cost-of-living adjustment was incorporated, firms were asked to provide their current inflation expectation or cost-of-living adjustment. A breakdown of the results is included in the special question section below.