Firms' Inflation and Wage Expectations During the Inflation Surge

Erwan Gautier, Frederique Savignac and Olivier Coibion

No 21445, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Using a new survey of French firms spanning the full 2020–2025 inflation cycle, we document that de-anchoring and passthrough decoupled during the inflation surge: the firms whose expectations drifted furthest from target were precisely those that did not act on them, while firms that embedded expectations into wages and prices remained relatively well anchored. A growing tail of firms expected persistently high inflation — “inflation disasters†— but these were disproportionately smaller, less attentive firms extrapolating local cost pressures. As a result, the surge in expectations did not generate wage-price dynamics, limiting the scope for a self-sustaining inflation spiral.

Keywords: Expectations (search for similar items in EconPapers)
JEL-codes: E2 E3 E4 (search for similar items in EconPapers)
Date: 2026-05
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