CFO inflation expectations signal elevated core prices ahead. A new survey measure tracking chief financial officers' price growth predictions shows strong correlation with actual core consumer price index inflation. CFOs, better informed about their own pricing plans than economy-wide forecasts, provide valuable insight into future inflation trends. Recent survey data collected before and during the oil shock suggests core inflation could remain elevated this year if historical relationships persist. These expectations matter significantly because they influence actual pricing decisions and can become self-fulfilling. The Federal Reserve closely monitors such indicators when setting monetary policy. This CFO-based approach offers advantages over traditional inflation surveys by focusing on firm-level decisions rather than broad economic projections.
