A Growing Number of Companies in Germany Want to Raise Prices

The ifo price expectations in Germany rose significantly to 19.7 points in December, up from 15.8 points* in November, the highest level since April 2023. All economic sectors contributed to this increase. “In the coming months, the inflation rate is expected to level off at around 2.5%, hence above the European Central Bank’s target,” says Timo Wollmershäuser, Head of Forecasts at ifo.

Price expectations for consumer-related service providers, including retailers, rose to 27.1 points, up from 25.8 points in November. Price expectations in manufacturing and among business-related service providers (including wholesalers) also rose, to 6.9 points and 22.5 points respectively, up from 6.7 points* and 19.0 points* in November. Although there are still more construction companies that want to lower, rather than raise, their prices, the indicator here also rose significantly to -1.5 points, up from -6.2 points* in November.

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