Companies See Inflation Inching Up to 2.1%, Atlanta Fed Says

• Long-run unit cost expectations (5-10 years ahead) increased by 0.1 percentage points to 2.8%, while year-over-year unit cost growth held steady at 2.0%
• Business inflation expectations have declined significantly from the April 2022 peak of 3.8%, with the Cleveland Fed reporting CEO expectations at 3.1% for the next 12 months (down from 3.3% in October 2025)
• Consumer inflation expectations showed more stability, with the median one-year outlook declining to 3.0% in February while three-year and five-year horizons remained steady at 3.0%

Summary

The Atlanta Federal Reserve's March 2026 Business Inflation Expectations survey reveals firms' year-ahead inflation expectations increased to 2.1%, up 0.2 percentage points from February's 1.9% but down from 2.5% recorded in March 2025. This figure remains slightly elevated compared to the pre-pandemic average of 2.0% (January 2017-December 2019).

Key Data Points:

• Year-ahead unit cost expectations: 2.1% (up from 1.9% in February 2026)
• Long-run cost expectations (5-10 years): 2.8% (up 0.1 percentage points)
• Year-over-year unit cost growth: Steady at 2.0%
• Peak unit cost expectations reached 3.8% in April 2022

The survey also indicated declining sales levels and profit margins compared to normal conditions.

Broader Inflation Context:

The Cleveland Fed's survey of business leaders showed expectations of 3.1% inflation over 12 months, down from 3.3% in October 2025. Consumer Price Index (CPI) data for February showed 2.4% year-over-year growth, matching January's reading and suggesting stable price pressures.

Consumer inflation expectations from the New York Fed showed a median of 3.0% at the one-year horizon (down 0.1 percentage points) and remained steady at 3.0% for three-year and five-year outlooks.

Market Implications:

Business leaders' inflation expectations are critical as they directly influence pricing decisions, which can affect the overall inflation trajectory. The modest uptick in short-term expectations, while remaining below year-ago levels, suggests firms anticipate continued moderate price pressures, though uncertainty persists around long-term cost trends.