IIM-A survey suggests mixed signals for business: Weak sales, higher profit margins

By A Representative
The latest round of the Business Inflation Expectations Survey (BIES) for October 2025 indicates a marginal rise in one-year-ahead business inflation expectations, even as cost pressures remain stable and profit margin expectations improve among firms. Carried out by the , the survey results are based on the responses of around 900 companies.

According to the survey, the one-year-ahead business inflation expectation, calculated from the mean of individual probability distributions of unit cost increases, rose to 3.97 percent in October from 3.79 percent recorded in September.

The survey also notes that firms’ average inflation expectations over the past year have remained broadly anchored at around 4.14 percent, while uncertainty around future inflation stayed unchanged at 1.90 percent.
Respondents are also periodically asked to project the one-year-ahead Consumer Price Index (CPI) headline inflation. Expectations for CPI inflation fell significantly to 3.83 percent in October, marking a decline of 44 basis points from 4.27 percent in August. The uncertainty around CPI expectations also eased to 0.87 percent from 0.95 percent.

Cost perceptions show no notable rise in pressure, with the share of firms reporting significant or very significant increases in unit costs (above 6 percent) declining slightly to 24 percent from 25 percent in September. Sales performance continues to face strain: during the June–October 2025 period, over 60 percent of firms reported sales levels as much less or somewhat less than normal. Only around 38 percent of businesses indicated that their sales were normal or above normal, a proportion that remained unchanged during September and October.
Despite weak sales trends, profit expectations show a marked improvement. The proportion of firms reporting normal or above-normal profit margins jumped sharply to 37 percent in October from 26 percent in September, supported largely by easing cost pressures.
The survey also gathers data on firms’ assessments of profit margins, sales levels, current and forward-looking cost changes through structured probability-based questions that reference “normal” economic conditions as those observed in the corresponding period over the past three years, excluding the .

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