Discussion Paper

Firm Price-Setting Behavior Amid Elevated Price Growth: Evidence From Our Surveys

Abstract: very month, the Richmond Fed surveys firms across the Fifth District to understand how economic and business conditions are changing. As a part of this survey, we ask firms to report the 12-month percentage change in the prices they receive from customers for their goods or services. Additionally, we ask firms to provide their expectations for how prices will change over the next 12 months. As inflation has picked up in the U.S. economy, we have paid particular attention to the price measures from our surveys. Not surprisingly, firms in our district have experienced higher price growth since 2021. Additionally, by comparing forecasted price growth to realized price growth, we find that firms were increasingly surprised by the intensity of price growth. As forecasts became less accurate and uncertainty around price growth rose, firms began to adjust their prices more frequently.

Keywords: inflation; Price-setting; 5th district;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Regional Matters

Publication Date: 2023-03-28