Since 2021, developed countries have experienced a significant inflation episode. This column uses Decision Maker Panel data from UK CEOs and CFOs to study firms' inflation perceptions and expectations around monthly official inflation releases. Firms' expectations are most responsive when inflation coverage in the media is elevated, suggesting salience is a key issue, as the media focuses attention on data releases. Furthermore, firms respond to changes in headline inflation rates and not to surprises relative to professional forecasts. The results highlight a distinction between financial markets ('Wall Street') and firms ('Main Street'), which should inform modelling of economic behaviour.
Nicholas Bloom, Philip Bunn, Paul Mizen, Gregory Thwaites and Ivan Yotzov
2 April 2025
Vox EU
https://cepr.org/voxeu/columns/inflation-wall-street-versus-main-street
This work is published under POID and the CEP's Growth programme.