Keshav Dogra, Sebastian Heise, Edward S. Knotek, Brent H. Meyer, Robert W. Rich, Raphael S. Schoenle, Georgio Topa, Wilbert van der Klaauw, and Wändi Bruine de Bruin
Working Paper 2023-5
June 2023

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We examine businesses' price-setting practices via open-ended interviews and in a quantitative survey module with business contacts from the Federal Reserve Banks of Atlanta, Cleveland, and New York in December 2022 and January 2023. Businesses indicated that their prices were strongly influenced by demand, a desire to maintain steady profit margins, and wages and labor costs. Survey respondents expected reduced growth in costs and prices of about 5 percent on average over the next year. Backward-looking, forward-looking, and hypothetical scenarios reveal average cost-price passthrough of around 60 percent, with meaningful heterogeneity across firms.

JEL classification: D4, E3, L2

Key words: prices, business survey, hypothetical questions

The authors thank Nicholas Parker, former survey director of the Atlanta Fed, for his expertise in constructing the semi-structured questionnaires and leading the interviews; Chris Oakley, vice president and coordinating regional executive of the Atlanta Fed’s Regional Economic Information Network (REIN), for his insights into business interviews; Antar Diallo, research assistant at the Atlanta Fed, for excellent research assistance; Jason Bram and Rich Deitz, research economists at the New York Fed, for their help in fielding the survey in the New York Fed’s regional business surveys; the Regional Analysis and Outreach group at the Cleveland Fed; and our surveyed business contacts for sharing their time and knowledge .The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.

Keshav Dogra is with the Federal Reserve Bank of New York. Sebastian Heise is with the Federal Reserve Bank of New York. Edward Knotek is with the Federal Reserve Bank of Cleveland. Brent Meyer is with the Federal Reserve Bank of Atlanta. Robert Rich is with the Federal Reserve Bank of Cleveland. Raphael Schoenle is with Brandeis University and the Center for Economic Policy and Research. Giorgio Topa is with the Federal Reserve Bank of New York. Wilbert van der Klaauw is with the Federal Reserve Bank of New York. Wändi Bruine de Bruin is with the University of Southern California.

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