Somewhat Fewer German Companies Plan to Increase Prices
Somewhat 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 27.2 points in March, down from 29.2 points* in February. This marks the sixth consecutive decline. “Companies have already passed most of their increased costs on to customers. At the same time, demand has softened. This suggests inflation will slowly subside in the months ahead,” says Timo Wollmershäuser, Head of Forecasts at ifo.
The focal point, however, remains the retail sector, where price expectations fell only from 50.9 points* to 49 points. For food and beverages, they fell only from 76.2 points* to 64.5 points. For DIY stores, they even jumped higher, from 39.7 points* to 55 points; it was a similar story for flowers, plants, and pet products and for books. Expectations also rose sharply for toy retailers, from 65.8 points* to 86.3 points, and for consumer electronics, from 55.8 points* to 72.6 points. Stationery and paper retailers, on the other hand, slashed their price expectations from 85.7 points* to 45.3 points.
Service providers strengthened their price plans from 31.7 points* to 34.7 points. However, most of the changes in the individual industries were minimal.
Fewer manufacturers in particular have plans to raise their prices; expectations here fell from 25.4 points to 17.6 points. In the paper industry, an overwhelming majority of companies even anticipate price reductions (minus 69.3 points), as do those in the chemical industry (minus 13 points). The wave of price rises is also petering out in construction, where expectations dropped from 17.1 points to 7.2 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.
*Seasonally adjusted
