Underlying trend inflation has been running persistently below 2  Details on the CFO survey, which is a partnership of Duke University, the Federal Reserve Bank of Richmond, and the Federal Reserve Bank of Atlanta, can be found on the Richmond Fed’s website at https://www.richmondfed.org/research/national_economy/cfo_survey. 8  -6percent for many years.
9 In addition, research suggests that although increasing labor market tightness may show through to wage inflation, the pass-through to price inflation has become highly attenuated. 10 These results suggest that businesses tend to respond to increased labor costs by reducing margins rather than increasing prices later in the cycle.