Business inflation expectations drop, although they remain above the official target

Business inflation expectations drop, although they remain above the official target

The INE reported that the national private sector actors reduced their inflation forecast to the levels of early 2022.

Inflationary expectations dropped to 8% among Uruguayan businessmen.

Photo: Freepik

He Statistics National Institute (INE) released today its monthly survey of business inflation expectations (Business Expectations Survey). This survey is especially relevant given that businessmen are the direct price makers in practically all markets.

Inflation expectations fell for this year from 8.2 to 8.0%, according to the median of the responses to the survey. This way, annual inflation expectations return to their level at the beginning of 2022in the months prior to the Russian invasion of Ukrainewhich would then cause a push in inflation at a global level, which also affected the Uruguay.

Entrepreneurs also answer what is their expectation of production cost increases average. In this case, the median of the responses is a 9% annual increase this year 2023. Inflation and cost increase expectations are maintained for the year 2024. Thus, businessmen estimate (in general) that their costs will rise more than the selling prices, both this year and in 2024.



Although there has been a gradual decline in the inflation expectations of businessmen, these They are still above the official goal for this year (6.7%) and also above the expectations of analysts, who forecast inflation of 7.3% to December 2023.

The survey of businessmen’s inflation expectations began to be published a little over a year ago by the INE, since it was considered relevant information for public opinion. The survey was carried out many years ago by the INE, to be used by the Central Bank of Uruguay (BCU) in his work on monetary policy.

In a recent meeting of managers and technicians from the BCU with journalists specialized in economics, the question was raised concern about the resistance of employers to lower their expectations inflation, even in a framework of contractionary monetary policy.

It was raised that one of the factors with a high impact on business expectations of inflation is the rates of salary increases in their companieswhich are defined (in general) once a year, within the framework of the Wage Councils.

Source: Ambito

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