One of the most important indicators of future inflation suggests that businesses do not expect their costs to increase due to higher tariffs.
According to the Atlanta Fed, business inflation expectations remained unchanged at 2.2% in November. monthly survey Approximately 640 companies across six states are participating. This was lower than the expected inflation rate of 2.4% a year ago.
The survey asks companies to predict their costs, not the prices they charge. Tariffs are levied on imported goods and are paid directly by the companies importing the goods, but can be offset by changes in the value of the dollar relative to foreign currencies. When President Donald Trump imposed tariffs on some imports from China during his first term, the dollar strengthened against the Chinese currency, largely eliminating the increased costs for importers.
Last year's unit price forecast has declined significantly since peaking at 3.8% in April 2022. That's still a slight increase compared to the pre-pandemic average of 2.0%.
Companies reported a median price increase of 3.0% over the past 12 months. The median price forecast for next year is also 3.0%. This was lower than the August forecast of 4.0% and the realized price increase rate of 5.0%.
