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Are Firms Factoring Increasing Inflation Into Their Prices?

Author

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  • Felipe Schwartzman
  • Sonya Ravindranath Waddell

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.

Suggested Citation

  • Felipe Schwartzman & Sonya Ravindranath Waddell, 2022. "Are Firms Factoring Increasing Inflation Into Their Prices?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 22(08), March.
    • Handle: RePEc:fip:fedreb:93819
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2022/eb_22-08
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    Keywords

    inflation; aggregate inflation;

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