Companies across the Federal Reserve's Eighth District reported that prices charged to customers rose 3% over the past year, and they anticipate the same rate of increase in the year ahead, according to an August survey released by the Federal Reserve Bank of St. Louis. The findings suggest inflation is holding steady in the region, which includes all of Arkansas, most of Missouri, and portions of Illinois, Indiana, Kentucky, Mississippi, and Tennessee. Businesses aren't expecting price growth to slow down anytime soon.
Nearly half of the companies surveyed said their nonlabor costs had climbed compared to a year earlier, and about a third reported they'd been able to pass those higher expenses on to customers. When asked about supplier behavior, 27% of respondents said vendors were changing prices more often, while 24% noted suppliers were tacking on temporary fees or surcharges. Another 18% reported that suppliers were giving them less time before price quotes expired, forcing faster purchasing decisions. Only 11% said suppliers were adding automatic price-adjustment clauses, which the report interprets as a sign firms view these pressures as temporary rather than permanent. Despite rising costs, 64% of contacts said dollar sales had met expectations—matching the highest level recorded since February 2020.
The survey asked firms what was driving their sales growth, and 40% cited higher sales volume as the primary factor, while nearly 30% pointed to higher prices. The report notes that both the August survey and an earlier February survey showed companies expected 3% price growth going forward. According to the report, "Survey respondents indicated that average and median prices charged to customers increased 3% over the past 12 months, and firms expected the same pace over the next year."
The report explains that the shifting supplier practices are contributing to elevated inflation by keeping input costs higher and harder to predict. One technology services company reported that data-storage vendors switched from flat-rate pricing to usage-based charges, which sharply increased monthly bills. A construction firm said suppliers were offering shorter price-guarantee windows, forcing contractors to either order materials earlier or take on more bidding risk. The research indicates businesses are operating in an environment where costs are rising at a steady clip, with input fluctuations tied to uncertainty from tariff changes and conflict in the Middle East. Yet many companies are managing to sustain sales volumes, which allows them to pass costs along to customers—suggesting they don't expect inflation to ease in the near future.