Firm Inflation Expectations and the Macroeconomy: Evidence from Thailand

Thai firms’ inflation expectations are influenced by global inflation and oil prices, according to monthly firm-level survey data from 2012 to 2023. Although these expectations are biased and highly dispersed, firms respond more attentively to macroeconomic conditions during periods of higher inflation and stronger economic growth. Negative global oil supply news shocks can trigger persistent upward revisions in inflation expectations, particularly when inflation is high, while Thailand’s 2012–2013 minimum wage hike had modest and short-lived effects. Higher inflation expectations also affect business decisions: price-setting and employment responses are significant during high-inflation periods, while investment is particularly constrained during periods of lower economic growth.

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