Firms’ prices respond rapidly to CPI data – BoE study
Companies are more sensitive to rises in inflation than to falls
Firms alter their perceptions of inflation within hours of the release of the latest consumer price index (CPI) figures, research has found.
A working paper by economists from the Bank of England (BoE) states that the pass-through from CPI inflation figures to firms’ perceptions is around 70%.
However, the study found that the impact of CPI inflation on firms’ own price growth was higher when inflation rises than when it declines.
As an illustrative example, the authors said that a one percentage
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