Food Prices Set to Rise Again in Germany
Germans will have to brace themselves for further food price increases over the next few months. According to an ifo survey conducted in June among food, beverage, and tobacco retailers, price expectations are at 98.9 points, which means that almost all the retailers surveyed are planning to raise prices. The majority of the surveyed retailers in the other segments also intend to put prices up: their price expectations rose to 78.6 points, up from 75.5 points. “We can therefore expect inflation rates to remain high for the time being,” says Timo Wollmershäuser, Head of Forecasts at ifo.
“However, there are initial signs that the rate of inflation could gradually decrease toward the end of the year,” Wollmershäuser continues. “In several economic sectors with production upstream of private consumption, price expectations have now dropped twice in a row.” These include manufacturing (59.7 points, previously 66.7 points), construction (50.0 points, previously 56.0 points), and wholesale (57.4 points, previously 68.1 points). It is only among service providers that price expectations have remained largely the same (47.1 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 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.
