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Firm Inflation Uncertainty

Author

Listed:
  • Ivan Yotzov
  • Lena Anayi
  • Nicholas Bloom
  • Philip Bunn
  • Paul Mizen
  • Özgen Öztürk
  • Gregory Thwaites

Abstract

We introduce a new measure of own-price inflation uncertainty using firm-level data from a large and representative survey of UK businesses. Inflation uncertainty increased significantly from the start of 2021 and reached a peak in the second half of 2022, even as a similar measure of sales uncertainty declined. We also find large cross-sectional differences in inflation uncertainty, with uncertainty particularly elevated for smaller firms and those in the goods sector. Finally, we show that firms which are more uncertain about their own price expectations experience higher forecast errors 12 months later. These findings suggest that studying inflation uncertainty at the firm level may be an important new dimension to understanding firm performance.

Suggested Citation

  • Ivan Yotzov & Lena Anayi & Nicholas Bloom & Philip Bunn & Paul Mizen & Özgen Öztürk & Gregory Thwaites, 2023. "Firm Inflation Uncertainty," NBER Working Papers 31300, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31300
    Note: AP CF EFG ME PR
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    Cited by:

    1. Di Pace, Federico & Mangiante, Giacomo & Masolo, Riccardo M., 2025. "Do firm expectations respond to monetary policy announcements?," Journal of Monetary Economics, Elsevier, vol. 149(C).

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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General

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