Price Expectations of German Companies Fall
Fewer companies in Germany are looking to raise their prices. In February, the ifo price expectations slipped to 15.0 points, down from 18.8 points* in January. This was mainly due to the consumer-related sectors, where price expectations fell from 32.4 points* to 28.9 points. “This suggests that in the coming months, inflation will continue to decline,” says Timo Wollmershäuser, Head of Forecasts at ifo.
In the consumer-related sectors, fewer service providers in particular are planning to raise their prices (26.8 points, down from 42.1 points*). Price plans fell especially sharply in accommodation (from 51.9 points* to 31.8 points) and in arts, entertainment, and culture (from 28.6 points* to 15.5 points). In hospitality, too, fewer companies are looking to raise their prices (from 65.9 points* to 54.0 points).
In retail, however, price expectations rose a bit, from 28.8 points* to 29.8 points. This was mainly due to the food and beverage retail sector (from 43.8 points* to 56.9 points), while price plans in the rest of the retail sector dipped slightly (from 33.1 points* to 32.5 points).
In construction, the balance value plunged from -0.4 points* to -5.0 points. The majority of companies actually want to reduce their prices. In the manufacturing sector, only a small majority of the companies surveyed intend to raise their prices. Price expectations there have risen slightly to 4.9 points, up from 4.3 points*.
The points for the ifo price expectations indicate the percentage of companies that intend to increase prices on balance. The balance is obtained by subtracting the percentage of companies that want to lower their prices from the percentage of those that want to raise their prices. If all the companies surveyed intended to increase their prices, the balance would be +100 points. If they all wanted to lower their prices, it would be -100. The balance was seasonally adjusted. The ifo Institute does not ask about the amount of the planned price change.
* Seasonally adjusted