WASHINGTON — The Atlanta Federal Reserve Bank's monthly survey released Friday showed businesses in the Sixth district slightly lowered their inflation expectations for 2012 to 1.7% compared to the May survey when they projected a 1.8% rise.
However, the survey said businesses expect "larger upward influence" on prices coming from labor costs over the coming year.
"Inflation uncertainty was unchanged at 2.9% in June," the Atlanta Fed said.
Firms reported that unit costs had risen 1.6% on an annual basis, unchanged from their assessment in May.
The survey was conducted June 1115 with 167 firms responding to questions about their business conditions, inflation outlook, and potential pricing pressures.
The survey noted businesses are still operating in an environment of below normal sales levels and profit margins, but sales and margins improved in June.
"Projecting ahead, firms continue to anticipate little or moderate upward pressure coming from input costs over the next 12 months," it said.
The survey said expectations for labor and non-labor costs over the next year declined for the second consecutive month in June.
"Just 32% of firms expect moderate or strong upward price influence from sales in the coming year, the smallest percentage since November 2011," the Atlanta Fed said.
"Respondents also anticipate that margin adjustments are likely to have a modest upward influence on the prices they charge in the coming year," it added.
The survey included a special question — asked each month — asking firms to estimate the impact of various influences on their prices over the coming 12 months.
"This month's special question aims to gauge the impact of those same factors over the previous 12 months," the Atlanta Fed said.
The result was respondents estimated that, on balance, margin adjustments had a "negligible" influence on prices over the past year, compared with their expectation that margin adjustments may increase prices slightly over the coming year.
The survey also said respondents believe "labor costs are likely to have a larger upward influence on prices in the coming year than they did in the past 12 months."
But firms largely anticipate similar cost pressure from non-labor costs over the next 12 months as they experienced in the past year.
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