To estimate the extent of slack in the economy, the Company Inflation Predictions Survey (BIES) polls a panel of business leaders about their short- and medium-term inflation forecasts.
This monthly Survey inquires about cost projections for the coming year and the factors that impact price modifications, such as profit, sales volume, and so on. The Survey is unique in that it questions corporations – the price setters – rather than consumers or households – about their price level projections. BIES is renowned for its probabilistic evaluation of inflation expectations, which allows one to quantify uncertainty. It also provides an indirect estimate of the economy’s general demand status. As a result, the findings of this Survey contribute to a better understanding of corporate inflation expectations and supplement other macro data needed for policymaking.
The “BIES – March 2022” is the 59th round of the Survey, which began in May 2017. These findings are based on answers from around 1100 businesses. Companies are generally chosen from the manufacturing sector.
A.Expected inflation
One year ahead, company inflation forecasts in March 2022 have climbed somewhat to 6.12 percent from 6.09 percent in February 2022, based on the mean of the individual probability distribution of unit cost increase. For the two months in a row, corporate inflation calculations remained over 6%. Chart 1 depicts the evolution of one-year ahead business inflation predictions.
The uncertainty of company inflation forecasts in March 2022 has remained at about 2.1 percent, as calculated by the square root of the average variance of the individual probability distribution of unit cost rise, as reported in February 202
B. Costs
The cost perceptions data indicates the persistence of high-cost pressures. Around 70% of the surveyed firms perceive a significant (over 6%) cost increase for the consecutive two months (Chart 2).
Over 39% of the firms in the March 2022 round of the Survey perceive that costs have increased very significantly (over 10%). Around 2/5th of the firms said more than a 10% cost increase for two consecutive matches.
