Companies across the United States increasingly expect inflation to remain contained this year, according to new surveys from regional Federal Reserve banks showing business price expectations falling to their lowest levels since before the 2022 inflation surge.
The Cleveland Federal Reserve’s Survey of Firms’ Inflation Expectations found that businesses anticipate general inflation of 3.1 percent over the next 12 months. That figure is down from a peak of 3.9 percent last year and far below the levels seen during the height of inflation in 2022, when year-ahead expectations climbed above seven percent.
Similarly, the Atlanta Federal Reserve’s Business Inflation Expectations survey shows firms expect their own unit costs to rise by just 2.0 percent over the next year. That is down from 2.8 percent earlier in 2025 and well below the readings above 5 percent recorded during the inflation spike of 2022–2023.
Both surveys suggest that businesses believe the most intense phase of price pressures has passed. The Cleveland Fed also reported a decline in uncertainty, with the dispersion of responses falling to its lowest level in recent years. That narrowing range indicates growing confidence among firms that inflation will remain manageable.
Corporate behavior appears to reflect those expectations. Major consumer brands are shifting away from aggressive price increases and instead emphasizing affordability. PepsiCo, for example, recently announced price cuts on several snack products after citing consumer concerns about cost pressures. Company leadership acknowledged that affordability has become a central factor for low- and middle-income shoppers.
This marks a notable change from 2022 and 2023, when many firms passed higher input costs directly to consumers through double-digit price hikes. Now, companies are increasingly absorbing costs, redesigning packaging, or adjusting product strategies to maintain market share in a more price-sensitive environment.
For policymakers, declining business inflation expectations are a significant data point. Economists widely agree that expectations can influence actual inflation outcomes, as pricing decisions are shaped in part by what firms anticipate about future costs.
The survey results also complicate predictions that tariffs would necessarily trigger renewed price acceleration. While some economists warned that import duties could increase consumer prices, core consumer goods inflation has remained relatively modest over the past year.
Some analysts argue that fiscal factors may also play a role. Hoover Institution economist John Cochrane has suggested that stronger fiscal backing—where revenues are expected to better align with spending—can ease inflationary pressures. In that framework, tariff revenues could contribute to improved fiscal positioning, potentially reinforcing price stability over time.
While inflation remains above the Federal Reserve’s long-term target, the latest surveys indicate that businesses are adjusting to a more stable pricing environment. If current trends hold, inflation expectations may continue drifting closer to pre-2022 norms, signaling a broader normalization in the post-pandemic economy.
