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US: Atlanta Fed Business Inflation Expectations
| Actual | Previous | |
| Year over Year | 1.9% | 2.0% |
Highlights
Business inflation expectations break nicely lower in February, the Atlanta Fed survey finds. One-year inflation expectations among firms surveyed in the Atlanta Fed district are down to 1.9 percent in February from 2.0 percent in January and from 2.3 percent in February 2025.
The inflation expectations figure for February 2026 is the lowest since it registered 1.9 percent in November 2020 when pandemic inflation effects were just kicking in. Inflation expectations in this survey have fallen each month since 2.8 percent in April 2025 at the height of the inflation scare spurred by President Trump's April 2 Liberation Day announcement of huge tariffs.
This is the sort of report Fed officials are referring to when they argue that inflation expectations remain well anchored, which is key to their success in getting inflation back to the 2 percent target.
Definition
The Atlanta Fed's Business Inflation Expectations survey provides a monthly measure of year-ahead inflation expectations and inflation uncertainty from the perspective of firms. The survey also provides a monthly gauge of firms' current sales, profit margins, and unit cost changes.
Description
The inflation expectations of firms are a critical component of the inflation outlook and provide guidance on the potential path of inflation. If firms expect that prices will increase at a given rate, their purchasing, pricing, and/or wage decisions will reflect this expectation, making the increase more likely to be realized.
Also important is the risk that firms attach to their inflation expectations. The methods the Atlanta Fed uses to compute firms' inflation expectations provide a direct measure of the subjective probabilities that firms assign to various inflation outcomes.
The FOMC judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Accurately gauging inflation expectations and uncertainties regarding these expectations are a key component of achieving this 2 percent target.
Other measures of inflation expectations are gleaned from consumer opinions, financial market instruments, and select industry groups (such as professional forecasters and purchasing managers), but there are no alternative measures of firms' inflation expectations.
When business expectations for inflation deviate from the FOMC's 2 percent target for inflation over the medium term (higher or lower than target), or when uncertainty about inflation runs higher than normal, it could be an early signal that the Federal Reserve is at risk of missing its price stability mandate. The inflation mandate is balanced against a goal of sustainable long-term employment growth.