More of Germany’s Consumer-Related Companies to Raise Prices

More of Germany’s consumer-related companies are planning to raise their prices. The ifo price expectations for these industries rose from 32.3 points* in December to 32.9 points in January. Price expectations increased noticeably among consumer-related service providers in particular, from 37.3 points* to 42.1 points. In retail, by contrast, the proportion of companies planning price increases declined; the balance there fell from 30.0 points* to 28.6 points. “This suggests that in the coming months, inflation will subside, but only slowly,” says Timo Wollmershäuser, Head of Forecasts at ifo.

While food and beverage prices are likely to rise again somewhat more sharply (42.2 points, up from 36.9 points*), the price pressure on clothing retailers has eased (12.4 points, down from 15.5 points*). Prices in bicycle retail are likely to fall further, although not as quickly as before (-19.3 points, up from -27.0 points*). Hotel stays are projected to become more expensive (51.9 points, up from 40.1 points*). Price increases are also expected to continue in the hospitality sector, though not quite as steeply as in January (67.9 points, down from 87.5 points*). Slightly fewer price increases are also expected among tour operators (39.4 points, down from 41.1 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 +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