Firm Inflation Uncertainty

Ivan Yotzov, Lena Anayi, Nicholas Bloom, Philip Bunn, Paul Mizen, Özgen Öztürk and Gregory Thwaites

AEA Papers and Proceedings, 2023, vol. 113, 56-60

Abstract: We introduce a new measure of own-price inflation uncertainty using firm-level data from a large and representative survey of UK businesses. Inflation uncertainty has increased significantly since the start of 2021, even as a similar measure of sales uncertainty has declined. We also find large cross-sectional differences in inflation uncertainty, with uncertainty particularly elevated for smaller firms and those in the goods sector. Finally, we show that firms that are more uncertain about their own price expectations experience higher forecast errors 12 months later. These findings suggest that inflation uncertainty may be important for understanding firm performance.

JEL-codes: D22 D81 D84 E31 E37 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1257/pandp.20231035

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