Jaison R. Abel, Richard Deitz, and Nick Montalbano

Businesses experienced substantial cost pressures in 2025 as the cost of insurance and utilities rose sharply, while an increase in tariffs contributed to rising goods and materials costs. This post examines how firms in the New York-Northern New Jersey region adjusted their prices in response to these cost pressures and describes their expectations for future price increases and inflation. Survey results show an acceleration in firms’ price increases in 2025, with an especially sharp increase in the manufacturing sector. While both cost and price increases intensified last year, our surveys reveal that these do not contribute to firms believing that inflation will be on the rise in the short or longer term. In fact, firms’ inflation expectations have moderated compared to what was expected a year ago. Firms now anticipate inflation of 3 percent in the year ahead, lower than what was expected last year at this time. Importantly, like last year, longer-term inflation expectations also remain well anchored.