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Inflation Project


Business Inflation Expectations
Special Questions Series

In addition to gauging firms' price-setting environment and year-ahead unit cost expectations, the Atlanta Fed uses the survey to investigate issues of longer-term interest for research and policy. Frequently, we will ask a "special question" designed for this purpose. Here is a summary of the special questions and responses from our panel.

December 2011: The FOMC's longer-run inflation objective

What rate of inflation do you think the Federal Reserve is aiming for in the long run?

Number of
responses
No opinion Slightly below 0% About 0% About 1% About 2% About 3%
151 16% 1% 4% 15% 49% 16%

About half of the panel believe the FOMC is aiming for an inflation rate of 2 percent. The other opinions were about evenly distributed around this number.


November 2011: How are price changes implemented—increases vs. decreases

Survey respondents were randomly assigned one of the following two questions:

Special Question A
When you cut price(s), how is this usually accomplished?

Number of
responses
Until it's time to
reevaluate prices
Negotiated on a
customer-by-
customer basis
With an
expiration date
That lasts as long
as product is available
N/A***
70 20% 33% 27% 11% 9%

Special Question B
When you raise price(s), how is this usually accomplished?

Number of
responses
Until it's time to
reevaluate prices
Introduced on a
customer-by-
customer basis
In the form
of a surcharge
That lasts as long
as product is available
N/A***
72 57% 38% 3% 1% 1%
***For firms classified as N/A, prices are regulated or otherwise fixed.

The results indicate that price increases are typically considered as "permanent" adjustments, whereas price cuts are generally implemented on a temporary basis.


October 2011: Adjusting prices in the face of cost pressure

Survey respondents were randomly assigned one of the following two questions:

Special Question A
Faced with a modest rise (2 percent) in unit costs, your firm would most likely:

Number of responses Not change prices to protect market share Not change prices due to contractual obligations Not change prices because it is costly Pass a small portion of the cost increase on to customers Pass most of the cost increase on to customers Unit costs don't influence our prices Other
84 18% 7% 1% 32% 31% 10% 1%

Special Question B
Faced with a significant rise (about 6 percent) in unit costs, your firm would most likely:

Number of responses Not change prices to protect market share Not change prices due to contractual obligations Not change prices because it is costly Pass a small portion of the cost increase on to customers Pass most of the cost increase on to customers Unit costs don't influence our prices Other
71 8% 7% 3% 35% 37% 7% 3%

Note: Percentages may not add up to 100 percent because of rounding.

2011 | 2012 | 2013 | 2014