Business Inflation Expectations Rise to 3.6 Percent for 2026

Financial decision-makers expect price growth at their firms to reach 3.6% for the 2026 calendar year, a level that remains significantly above pre-pandemic norms and suggests core inflation may stay elevated [1]. This indicator, derived from a quarterly survey of chief financial officers, is closely watched by policymakers as a predictor of realized core consumer price index (CPI) inflation [1].

Inflationary Pressures and Business Sentiment

The 3.6% expectation for 2026 reflects a slight increase from the 3.4% reported for 2025 [1]. While this figure has retreated from the 4.9% peak observed in 2023, it continues to hover well above the 1.8% average recorded between 2001 and 2019 [1]. The survey data, collected between February 17 and March 5, 2026, captures business sentiment during the onset of the Iran conflict and the subsequent volatility in crude oil prices [1].

Because the survey asks CFOs to report expected price changes for their own product lines—rather than general economy-wide inflation—it provides a unique window into corporate pricing behavior [1]. Research indicates that these firm-level expectations track realized core CPI inflation closely over long periods [1]. Federal Open Market Committee (FOMC) members monitor these metrics as they deliberate monetary policy, particularly because expectations can influence actual pricing decisions and potentially become self-fulfilling [1].

Improving Economic Outlook

Despite the persistent inflation expectations, broader business sentiment has shown signs of a rebound. The latest AICPA and CIMA Economic Outlook Survey, which closed on February 25, 2026, found that 39% of executives are optimistic about the U.S. economy, up from 28% in the fourth quarter of 2025 [2]. Own-company optimism also improved, rising to 47% from 41% in the previous quarter [2]. This shift in sentiment coincides with an increase in business expansion plans, with 55% of respondents now reporting intentions to grow their operations, compared to 48% in the prior quarter [2].

What to watch

• Core CPI Realizations: Monitor upcoming Bureau of Labor Statistics reports to see if the 3.6% CFO expectation aligns with actual core CPI inflation as the year progresses [1].
• Oil Price Volatility: Watch for sustained impacts from the Iran conflict on energy costs, which may force firms to adjust their pricing strategies beyond current projections [1].
• Future Survey Waves: Keep track of subsequent quarterly CFO survey releases to determine if the uptick in business optimism leads to further upward pressure on firm-level price growth expectations [2].

The persistence of these expectations at 3.6% suggests that while business leaders are feeling more confident about growth, the path toward pre-pandemic inflation levels remains uncertain. Whether this gap between current expectations and historical norms narrows will depend on how firms balance their expansion plans against the ongoing challenges of input costs and broader economic conditions.