Slightly More Companies in Germany Plan to Raise Prices

Slightly more companies in Germany are planning to raise their prices. The price plans index rose to 18.0 points in November, up from 15.4 points* in October. This is primarily due to business-related service providers and wholesalers, where the balance value climbed from 21.5 points* to 28.3 points. In consumer-related sectors, however, price expectations continued to fall. Among food retailers, the balance fell from 40.7 points* to 34.2 points; among other retailers, from 28.2 points* to 27.7 points; and among consumer-related service providers, from 29.3 points* to 25.5 points. “That means inflation is continuing to decline,” says Timo Wollmershäuser, Head of Forecasts at ifo.

“It’s likely that inflation will rise again temporarily to around 4% in December. However, this is primarily thanks to a base effect. Last year, gas prices in the consumer price index fell sharply as the government covered the costs of people’s December bills. But the inflation rate will fall to below 3% as early as the beginning of next year,” Wollmershäuser adds.

In manufacturing, too, fewer companies are looking to raise their prices; the balance dropped from 5.8 points* to 2.5 points. The price expectations of car manufacturers in particular fell sharply, from 30.6 points* to 10.2 points. In construction, the downward price trend slowed somewhat, with price expectations rising from -9.2 points* to -4.8 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 +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