Inflation expectations play a crucial role in shaping economic outcomes, influencing both future price levels and monetary policy decisions. Recent research highlights the importance of inflation expectations gathered directly from business leaders, particularly chief financial officers (CFOs), who provide insights into anticipated price changes within their own firms. This unique approach offers a valuable perspective on inflation trends, complementing traditional surveys focused on economy-wide forecasts.
The Federal Reserve collaborates with Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta to conduct the CFO Survey quarterly. This survey collects data from financial decision-makers across diverse industries and firm sizes, asking them about expected price growth for their main product lines or services over the coming year. By focusing on firm-specific price expectations, the survey captures detailed information that reflects direct business pricing plans and cost pressures.
Analysis of data spanning from 2001 through early 2026 reveals that CFOs’ one-year-ahead price growth expectations closely track actual core consumer price index (CPI) inflation. Historically, these expectations have provided more accurate forecasts than other common measures such as household surveys or professional forecasters. For example, before the pandemic, CFOs expected an average price increase of about 1.8%, aligning well with actual inflation rates during that period. However, since 2021, CFO inflation expectations have risen significantly, peaking at nearly 5% in 2023 before moderating slightly to around 3.6% for 2026.
The recent CFO Survey data, collected around the start of 2026 amid global supply disruptions like the Iran conflict and rising oil prices, suggest that core CPI inflation is likely to remain elevated throughout this year. This contrasts with some professional forecasts that predict a faster return to pre-pandemic inflation levels. The divergence between CFO expectations and other forecasts may reflect ongoing pricing pressures at the firm level that have yet to fully ease.
Further examination shows that CFOs adjusted their inflation expectations sharply in response to policy changes such as tariff announcements in 2025. These adjustments were broad-based across sectors but varied in magnitude, indicating that firms are sensitive to supply chain costs and trade policy impacts when setting prices. Despite some moderation later in the year following partial tariff reversals, price growth expectations remained above historical norms.
Overall, the CFO Survey provides a timely and firm-level perspective on inflation dynamics that can help policymakers better understand how businesses anticipate and respond to economic conditions. Monitoring these expectations alongside traditional inflation measures is especially useful during periods of supply shocks or economic uncertainty. As the Federal Reserve continues to navigate its monetary policy goals, insights from business leaders’ pricing plans offer an important gauge of future inflation risks and pressures.
In conclusion, while there are signs of moderation, elevated inflation expectations among CFOs indicate that price growth may persist above the Federal Reserve’s target in the near term. This underscores the need for ongoing vigilance in monetary policy to ensure inflation remains under control while supporting economic stability.
