Chief financial officers at 304 companies polled by the Financial Executives Institute/Duke University Corporate Outlook Survey predict that prices will increase by 3.5% this year, up sharply from the 2.2% inflation rate predicted just three months ago.
One out of four firms said recent oil price increases will lead to higher prices for their products, with the average price increase at 6%. CFOs in transportation and energy industries expect to raise prices by 9.5%. Some 34% of respondents said rising oil prices will hurt earnings, although they predict an average increase in earnings of 20% this year.
Health-care costs are expected to continue accelerating this year, with a mean increase of 8.6%, adding to inflation. Respondents also expect wages to increase at a mean rate of 4.7% this year, in response to the tight labor market. One-third of the firms said they expect to be involved in mergers and acquisitions this year, up from 25% experiencing M&A activity last year.