Fewer German Companies Plan to Increase Prices
Fewer German companies are planning to raise their prices in the next three months, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 35.4 points in January, down from 40.1* points in December. Companies in manufacturing in particular, but also in the service sector, construction, and trade, are planning fewer price increases. “This confirms once again that we have left the crest of the inflation wave behind us,” says Timo Wollmershäuser, Head of Forecasts at ifo.
“However, inflation will remain high in the months ahead, and price increases for consumers will level off only gradually,” Wollmershäuser adds. In consumer-related businesses in particular, price expectations remain high and are declining only slowly. Food, toy, and stationery retailers, travel agencies and tour operators, and hotels are even planning to raise their prices more frequently than in the previous month. By contrast, price expectations declined among retailers for bicycles and for consumer and household electronics as well as in hospitality.
In manufacturing, price expectations declined in almost all industries. Energy-intensive industries in particular are benefiting from falling market prices for natural gas, crude oil, and electricity. In the paper industry, the companies surveyed that want to reduce their prices are now in the majority. Price expectations among beverage manufacturers are particularly high and have also risen sharply.
*Seasonally adjusted 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.
