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Firms' Inflation and Wage Expectations During the Inflation Surge

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  • Gautier, Erwan
  • Savignac, Frederique
  • Coibion, Olivier

Abstract

Using a new survey of French firms spanning the full 2020–2025 inflation cycle, we document that de-anchoring and passthrough decoupled during the inflation surge: the firms whose expectations drifted furthest from target were precisely those that did not act on them, while firms that embedded expectations into wages and prices remained relatively well anchored. A growing tail of firms expected persistently high inflation — “inflation disasters†— but these were disproportionately smaller, less attentive firms extrapolating local cost pressures. As a result, the surge in expectations did not generate wage-price dynamics, limiting the scope for a self-sustaining inflation spiral.

Suggested Citation

  • Gautier, Erwan & Savignac, Frederique & Coibion, Olivier, 2026. "Firms' Inflation and Wage Expectations During the Inflation Surge," CEPR Discussion Papers 21445, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21445
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    Cited by:

    1. is not listed on IDEAS
    2. Okan Akarsu & Emrehan Aktuğ & Huzeyfe Torun, 2025. "Inflation Expectations and Firms' Decisions in High Inflation: Evidence from a Randomized Control Trial," CESifo Working Paper Series 12210, CESifo.

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    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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