Eighth District Firms Expect Higher Inflation in 2026

The Federal Reserve Bank of St. Louis conducts a quarterly survey of businesses across the Fed’s Eighth DistrictHeadquartered in St. Louis, the Eighth Federal Reserve District covers all of Arkansas, most of Missouri, and parts of Illinois, Indiana, Kentucky, Mississippi and Tennessee. to gain a deeper understanding of prevailing economic conditions. Survey results are regularly reported in the Economic Research section of our website.

In the February survey, a series of special questions pertaining to firms’ pricing changes and expectations for the remainder of the year are included. This blog post takes a closer look at the February 2026 survey results.The survey closed Feb. 17, prior to the Supreme Court’s decision on tariffs imposed in 2025 under the International Emergency Economic Powers Act and the spike in oil prices following events in Iran, both of which may affect firms’ outlook on inflation.

In the St. Louis Fed’s quarterly survey conducted every February since 2023, firms have been asked to provide an estimate of the growth rate of (1) the average prices they charged customers in the previous year and (2) the average prices they planned to charge in the year ahead. These results are summarized in the table below, along with comparable results nationally from The CFO SurveyThe CFO Survey is conducted through a partnership between Duke University’s Fuqua School of Business and the Federal Reserve banks of Richmond and Atlanta. These survey results are not weighted by firm size or sector; the initial sample is intended to reflect the industry mix of the Eighth District economy. as well as economic data from the Bureau of Labor Statistics (BLS). The realized data for each period are the latest available data as of February 2026, and forecasts are as of February 2023, February 2024, February 2025 and February 2026.

The table shows that, on average, District firms surveyed this February reported that prices charged to customers increased 2.6% in 2025. This increase was greater than that in 2024 and consistent with the forecast of 2.9% price growth made one year ago. The St. Louis Fed survey average for 2025 falls between the realized 2025 CPI and PPI inflation rates; this is to be expected because our panel comprises firms selling to other firms as well as directly to consumers.

Looking ahead to the next 12 months, the projections show mixed trends:

• District firms expect inflationary pressures to persist in 2026, with a 3.5% increase in the average prices they charge to customers.
• The CFO Survey shows stable to slightly decelerating inflationary pressures, although at a much higher rate of 4.2%.
• Professional forecasters anticipate inflation will moderate, with CPI inflation slowing from 2.8% in 2025 to 2.6% in 2026 and PPI inflation decelerating from 2.4% to 1.2%.

Passing On Costs to Customers

With inflation moving higher in 2025 and District survey respondents expecting this trend to continue through 2026, the survey results suggest firms are maintaining some power to pass on price increases to customers.

The figure below provides the firms’ responses when asked about their overall ability to increase prices charged to customers in the past three to six months and their expectations regarding the same for the next three to six months.

In the February 2026 survey:

• The share of respondents indicating improvement in their ability to increase prices over the past three to six months rose from 13% in 2025 to 21%.In the agriculture sector, the majority of respondents indicated no ability to increase the prices they charged customers.
• Expectations for the next three to six months, however, remained largely unchanged, with 70% of respondents expecting at least some ability to increase prices over this time frame.

It is worth noting that despite the slight increase in Eighth District firms’ expectations of higher prices for customers in 2026, the situation looks very different from the high inflation period of 2022. Then, about 40% of respondents indicated their ability to increase prices had improved during the past three to six months and over 80% of firms expected at least some ability to increase prices charged to customers over that year.

Notes

1. Headquartered in St. Louis, the Eighth Federal Reserve District covers all of Arkansas, most of Missouri, and parts of Illinois, Indiana, Kentucky, Mississippi and Tennessee.
2. The survey closed Feb. 17, prior to the Supreme Court’s decision on tariffs imposed in 2025 under the International Emergency Economic Powers Act and the spike in oil prices following events in Iran, both of which may affect firms’ outlook on inflation.
3. The CFO Survey is conducted through a partnership between Duke University’s Fuqua School of Business and the Federal Reserve banks of Richmond and Atlanta. These survey results are not weighted by firm size or sector; the initial sample is intended to reflect the industry mix of the Eighth District economy.
4. In the agriculture sector, the majority of respondents indicated no ability to increase the prices they charged customers.