Firms’ Inflation Expectations During the Pandemic-Era Surge

Ina Hajdini, Simar Malhotra and Timo Reinelt

FRBSF Economic Letter, 2026, vol. 2026, issue 19, 6

Abstract: Inflation expectations among businesses can affect how they set current prices. Firms’ expectations diverged from those of professional forecasters during the pandemic-era inflation surge and moved closer to household expectations. Analyzing firms’ survey data from 2018 to 2025 reveals three main patterns behind this shift: Businesses became more sensitive to current inflation perceptions, their longer-term expectations temporarily drifted up, and their perceptions of the Federal Reserve’s inflation goal increased. However, when inflation eventually moderated, the survey data show that firms’ inflation expectations largely returned to their characteristics from before the pandemic.

Keywords: inflation expectations; inflation; pandemic; firms (search for similar items in EconPapers)
Date: 2026
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