In Germany, slightly more companies than in the previous month intend to raise their prices in April. The ifo price expectations rose a little to 15.1 points in April, up from 14.3 points in March. “Inflation is unlikely to fall any further in the coming months and is set to remain at just over 2%,” says Sascha Möhrle, economic expert at the ifo Institute.
ifo price expectations in Germany fell to 14.3 points in March, down from 15.0 points in February. This is their lowest level since March 2021. “Inflation is still on the decline and should fall below 2% this summer. From a German perspective, there’s no reason why the ECB shouldn’t cut interest rates soon,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Fewer companies in Germany are looking to raise their prices. In February, the ifo price expectations slipped to 15.0 points, down from 18.8 points* in January. This was mainly due to the consumer-related sectors, where price expectations fell from 32.4 points* to 28.9 points. “This suggests that in the coming months, inflation will continue to decline,” says Timo Wollmershäuser, Head of Forecasts at ifo.
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.
The business situation for Germany’s retailers has deteriorated. The indicator fell from -8.8 points in November to -12.1 points in December. “For many retailers, business in the first weeks of the holiday season wasn’t as good as they had hoped,” says ifo expert Patrick Höppner. Their expectations for the coming months also darkened further and remain largely pessimistic.
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.
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.
In Germany, fewer companies are expecting prices to rise in the months ahead. Price expectations fell to 15.3 points in October, down from 15.7 points* in September. The most noticeable drop was in consumer-related industries. Among food retailers, the balance fell from 53.0 points* to 41.6 points, among other retailers from 31.8 points* to 28.3 points, and among consumer-related service providers from 35.1 points* to 29.3 points. “This means that consumer prices will still continue to rise. However, the pace will ease off and with it inflation,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Slightly more companies in Germany are planning to raise their prices. After twelve consecutive declines, price expectations went up again in September from 14.7 points* to 15.8 points. “It will be some time before Germany achieves the European Central Bank’s 2% inflation target,” says Timo Wollmershäuser, Head of Forecasts at ifo. Price expectations rose particularly sharply in hospitality, from 49.1 points* to 62.8 points. Among retailers, however, the balance dropped from 33.6 points* to 31.4 points.
Inflation in Germany is likely to fall further. German companies’ price expectations for the coming months have declined somewhat, according to the ifo Institute’s Business Survey. They fell to 14.7 points in August, down from 16.3* points in July. “However, the decline in inflation will be a long, hard road,” says Timo Wollmershäuser, Head of Forecasts at ifo. Among retailers, for example, the balance of price expectations fell only from 34.9* to 33.5 points; in hospitality, from 47.8* to 46.6 points; and in the food and beverage trade, from 55.3* to 55.1 points.
In food and beverage retail, many companies remain affected by supply problems: 69.9% of businesses reported this in July, down from 79.7% in June. Among car dealerships, the figure was 53.4%; in June, this figure was 60.9%. In clothing, toy, and furniture retail, only just under 20.0% of businesses were affected.
German companies’ price expectations for the coming months have risen marginally, finds the ifo Institute’s survey. They rose to 16.4 points in July, up from 16.3 points in June. “For the first time since October 2022, the share of companies planning to raise their prices has on balance not declined further,” says Timo Wollmershäuser, Head of Forecasts at ifo. A growing majority of the companies surveyed are planning further price increases, especially among retailers (34.8 points, up from after 32.9 points) and consumer-related service providers (32.9 points, up from 32.7 points). “This makes it likely that the decline in domestic inflation in particular will take a little longer,” Wollmershäuser adds.
The wave of price increases in Germany will slowly peter out over the next few months. This is a finding from the ifo Institute’s survey. The ifo price expectations dropped to 16.3 points in June, down from 19.1 points* in May. Food and beverage retail experienced a steep decline from 61.4 points* to 45.6 points. The pace of price increases in that segment is expected to gradually lessen. “Overall, however, inflation for consumers will fall only very slowly, because for many service providers, price expectations are declining sluggishly; for example, they went down in hospitality from 34.2 points* to 32.9 points, and in travel agency activities from 46.5 points* to 45.5 points,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Supply bottlenecks at German retailers eased in May. In May, 41.3% of the businesses surveyed reported shortages, down from 45.7% in April. “The share of retailers affected by supply problems has been falling steadily since the beginning of the year,” says ifo expert Patrick Höppner. “However, the business situation remains gloomy for many. Fewer consumers are going to shops, and when they do they’re buying less due to inflation,” he adds.
Price increases in Germany are expected to slowly subside over the next few months. Accordingly, ifo price expectations fell in May to 19 points, down from 21.5 in April. In food and beverage retail, the figure also fell, but at a very high level: from 69.7 to 63.2 points. “This means inflation for consumers will fall only very slowly, because for many service providers, too, price expectations are declining sluggishly; for example, they went down in hospitality from 36.4 to 34.1, and in travel agency activities from 48.6 to 46.5 points.”
Fewer and fewer German companies are planning to raise their prices in the next three months. For the economy as a whole, the ifo price expectations fell to 21.5 points in April, down from 27.1 points (seasonally adjusted) in March. This marks the seventh consecutive decline. “This suggests that the wave of price increases has already peaked,” says Timo Wollmershäuser, Head of Forecasts at ifo.