More and More Companies in Germany Plan to Raise Prices
In Germany, more and more companies are planning to raise their prices over the next three months. This is the finding of a recent ifo Institute survey. It records a new record high of 54.6 points, up from 47.6 (revised figure) points in February. People will have to expect sharp price increases in consumer-related industries in particular. Price expectations increased to 94.0 points among food retailers, to 68.2 points among other retailers, and to 64.0 points among consumer-related service providers. “Russia’s attack on Ukraine is driving up not only energy costs, but also the price of many agricultural raw materials,” says Timo Wollmershäuser, Head of Forecasts at ifo.
“This makes it likely that the rate of inflation will rise to well beyond 5 percent this year. Germany hasn’t experienced such a spike in over 40 years, not since the rate of inflation climbed to 6.3 percent following the second oil crisis in 1981,” Wollmershäuser adds. Price pressure is also mounting in those economic sectors upstream of private consumption. In wholesale, price expectations rose to 78.1 percent, in manufacturing to 66.3 points, in construction to 48.9 points, and in the service sector to 42.7 points.
The points for price planning 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 plus 100 points. If they all wanted to lower their prices, it would be minus 100. The balance was seasonally adjusted. The ifo Institute does not ask about the amount of the planned price change.
