Business leaders’ inflation expectations are stable at 2% over the 3-5 year horizon, in line with the price stability target.
Our quarterly survey on inflation expectations (defined here as the increase in the consumer price index), which is a module of the Banque de France’s Business Survey, was conducted from 28 August to 4 September. In the third quarter of 2024, the median inflation rate perceived by business leaders is 2.5%, above the consumer price index (CPI) (1.8% in August) and slightly above the harmonized index of consumer prices (HICP) (2.2% in August). Their median one-year expectation is 2.2%, and their medium-term expectation – 3 to 5 years – is 2%, in line with the price stability objective.
Quarterly survey of companies on their inflation expectations • 3rd quarter 2024
In the third quarter of 2024, the median of perceived inflation and that anticipated at 1 year are down, respectively by 0.5 and 0.3 percentage points (pp) compared to the previous quarter. They reach their lowest level since the start of this survey (Q4 2021). The median of inflation in the medium term (3-5 years) is stable at 2%, with a distribution of responses that shifts very slightly towards lower inflation: in the third quarter, inflation modalities below 2% increase by 2 pp (16% compared to 14% in the second quarter), while
the terms between 2% and 3% inclusive fell by the same amount (68% compared to 70% in the second quarter).
Business leaders expect basic wage growth over one year
Business leaders anticipate a growth in base salaries in their company of 2.5% in one year (median), down 0.5 pp over one quarter. In the third quarter, the 3% response remains the most frequently given (28%), but the modalities anticipating a salary increase of less than or equal to 2.5% are up 9 pp (58% against 49% in the previous quarter).
Methodology
This survey was conducted from August 28 to September 4 among a representative sample of 1,700 business leaders. It covers three major commercial sectors of the economy and companies of all sizes and from all regions of metropolitan France. The opinions of business leaders are collected by telephone during the monthly economic situation interview of the Monthly Economic Situation Survey and each business leader is questioned only once a year on this module.
They are asked four questions:
1 – In percentage terms, what do you think is the current inflation rate in France?
2 – In percentage terms, what do you think the inflation rate will be in one year in France?
3 – In percentage terms, what do you think the inflation rate will be in 3 to 5 years in France?
4 – In percentage terms, what do you think will be the change in basic salaries (gross, excluding bonuses) in your company over the next 12 months?
As a reminder, the basic salary corresponds to the gross salary before deduction of social security contributions and before payment of social benefits. It does not include bonuses or overtime.
The data are truncated at the 99th percentile. To calculate the results, the responses are weighted according to the average workforce and the relative importance of each company within its sector, then by the respective weights of the professional sectors in terms of added value at the aggregate level.
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