Philadelphia Fed Survey Shows Higher Inflation Expectations

Putting the headline diffusion index aside (and the highest prices paid since March 1980 at 76.8/ prices received highest since May 1981 at 41.0), the May Philly Fed survey included "special questions" on inflation. Here's what they found - seemingly a large jump in expectations for prices / labor costs:

• "Firms were asked to forecast the changes in the prices of their own products and for U.S. consumers over the next four quarters."
• "Regarding their own prices, the firms' median forecast was for an increase of 5.0 percent, an increase from 3.0 percent when the question was last asked in February."
• "The firms' actual price change over the past year was 2.3 percent. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 4.0 percent over the next four quarters, an increase from 3.0 percent in the previous quarter."
• "When asked about the rate of inflation for U.S. consumers over the next year, the firms' median forecast was 4.0 percent, an increase from 3.0 percent in the previous quarter."
• "The firms' median forecast for the long-run (10-year average) inflation rate was 3.0 percent, the same as in February."