Inflation expectations among U.S. business leaders have declined for the third quarter of 2025, according to the latest Survey of Firms’ Inflation Expectations (SoFIE) released by the Federal Reserve Bank of Cleveland’s Center for Inflation Research.

The survey, which is conducted quarterly, showed that CEOs and other top executives in July expected inflation as measured by the Consumer Price Index (CPI) to be 3.5 percent over the next 12 months. This marks a decrease from the previous quarter’s expectation of 3.9 percent in April.

The SoFIE collects responses from a broad panel of firms within both manufacturing and services sectors. The Cleveland Fed notes that tracking these expectations is important because they can influence how companies set prices for their goods and services, which may ultimately affect overall inflation.

According to the press release: "CEOs and other top executives reported in July (2025:Q3) that they expect inflation as measured by the Consumer Price Index to be 3.5 percent over the next 12 months, down from 3.9 percent in April (2025:Q2). The quarterly survey gathers responses from a large representative panel of firms in the manufacturing and services sectors. The Cleveland Fed reports these survey data because business leaders’ inflation expectations can influence the prices their firms charge customers, and these prices can, in turn, influence the path of inflation."

The SoFIE also asks participants once per year about their beliefs regarding average CPI inflation over five years, past year CPI inflation rates, perceptions of the Federal Reserve’s target rate for inflation, and estimates on whether CPI inflation could exceed five percent over the coming year.

More information about SoFIE is available at https://www.clevelandfed.org/indicators-and-data/inflation-expectations/sofie.

The Federal Reserve Bank of Cleveland is one of twelve regional Reserve Banks within the Federal Reserve System. Alongside supervising banking organizations and supporting financial stability through various services—including those provided to financial institutions and the U.S. Treasury—the Cleveland Fed plays a role in shaping national monetary policy. Its district covers Ohio, western Pennsylvania, eastern Kentucky, and northern West Virginia through its main office and branches in Cincinnati and Pittsburgh.

For additional details or inquiries about this report, Chuck Soder at chuck.soder@clev.frb.org or 216.672.2798 may be contacted.