Are Firms Factoring Increasing Inflation Into Their Prices?

Abstract: While inflation is low and stable, business leaders are well justified in paying little attention to aggregate inflation measures when making their own pricing decisions. In this article, we introduce a new set of quarterly questions in a business survey that help to ascertain the extent to which firms pay more attention to inflation measures as inflation rises. We find that, from July 2021 to January 2022, business leaders not only report paying more attention to aggregate inflation measures, but also report incorporating those measures into their own pricing decisions.

Keywords: inflation; aggregate inflation;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2022-03

Volume: 22

Issue: 08