WASHINGTON — The Atlanta Federal Reserve Bank's monthly survey released Friday showed businesses in the Sixth district raised their inflation expectations for 2012 to 1.8% from 1.7% in the prior month, while the measure of their uncertainty about future prices fell slightly.

The survey also included a special question which noted that on average firms see unit costs rising by 2.9% each year over the next five to 10 years.

The survey respondents' expectation of a 1.8% increase in unit costs is up from the +1.7% expectation in last month's survey, but inflation uncertainty declined by 0.1 percentage point to 2.5% in October.

Firms reported unit costs had risen by 1.4% on an annual basis, up from their assessment of a 1.3% rise in September.

The survey was conducted October 1519 with 196 firms responding to questions about their business conditions, inflation outlook, and potential pricing pressures.

After some improvement in sales levels and margins last month, the survey showed "both factors deteriorated in October."

On their inflation outlook, "Firms continue to anticipate little or moderate upward pressure coming from input costs over the next 12 months," the Atlanta Fed said.

The survey said expectations for the price influence from both labor and non-labor costs over the next year "held steady" in October.

"Respondents also anticipate that margin adjustments and sales levels are likely to have a small upward influence on prices over the coming year," the Atlanta Fed said.

The survey included a special question aimed gauging inflation expectations and uncertainty over the longer term.

"This month, respondents projected unit costs to rise by 2.9% per year over the next five to 10 years," the Atlanta Fed said. "Firms' uncertainty about the future path of inflation was 2.7%."

It said that figure roughly mirrors the uncertainty in the distribution of firms' year-ahead inflation predictions.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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