Monitoring pricing behaviour dynamics through the lens of business tendency surveys

Aslihan Atabek Demirhan

Central Bank Review, 2025, vol. 25, issue supplement

Abstract: Firms' pricing decisions play a pivotal role in shaping inflation dynamics through their collective price-setting behaviour. This study investigates firms’ pricing behaviour in the Turkish manufacturing sector using firm-level Business Tendency Survey data. Newly constructed monthly indicators capture the frequency and synchronization of price changes, providing insights into how price-setting dynamics evolve under high and volatile inflation. The results show that state-dependent pricing has become increasingly dominant in recent years, with firms responding more rapidly to cost and demand shocks while exhibiting reduced price rigidity. Sectoral evidence reveals marked heterogeneity across industries, reflecting differences in market structures and cost pressures. Moreover, firms display asymmetric behaviour, adjusting prices upward faster than downward, which contributes to inflation persistence. Overall, the findings highlight that the pricing behaviour of Turkish manufacturing firms is shaped by elevated inflation and economic shocks. These dynamics have important implications for monetary policy, underscoring the importance of expectation management and targeted interventions to support the ongoing disinflation process.

Keywords: Pricing behaviour; Price rigidity; Inflation dynamics; State-dependent pricing; Firm-level data (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:cebare:v:25:y:2025:i:supplement:article:100226

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