Price Expectations Rising Again in Germany

The proportion of companies in Germany that want to raise their prices in the coming months is increasing again. The ifo price expectations rose to 19.7 points in December, up from 18.1 points* in November. Price expectations reached their temporary low in August 2023 at a balance of 14.5 points. “This means the decline in inflation rates is likely to stall for the time being,” says Timo Wollmershäuser, Head of Forecasts at ifo.

In consumer-related services, price expectations jumped particularly sharply to 37.3 points, up from 25.5 points* in November. Restaurants in particular want to increase prices noticeably (87.6 points, up from 45.9 points* in November); they are likely to pass on the renewed VAT increase to customers. However, retailers are also planning more price increases again (29.8 points, up from 26.6 points* in November).

In manufacturing, too, more companies are again looking to raise their prices; the balance rose to 3.6 points in December, up from 2.6 points*. In construction, the downward price trend slowed once more, with price expectations rising to -1.0 points, up from -4.2 points* in November.

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