September 8, 2022
German companies want to increase their prices on a large scale, finds the ifo Institute’s latest survey. For the economy as a whole, price expectations for the coming months stood at 47.5 points in August, down slightly from 47.6 points in July. For food, the indicator stood at 96.8 points, down from 99.4 points in July. “Unfortunately, an end to the wave of inflation is not in sight,” says Timo Wollmershäuser, Head of Forecasts at ifo.
“So far, energy suppliers have borne the brunt of the sharp increases in market prices for electricity and natural gas, passing on only a small proportion to their customers. This is likely to change in the coming months, leading to double-digit inflation rates. That means consumers will curtail their consumption and overall economic output will contract in the second half of the year,” Wollmershäuser continues.
A particularly large number of clothing manufacturers plan to raise their prices, with the indicator rising to 89.2 points, up from 84.6 points in July. The numbers are also very high in hospitality (76.4 points), in services to buildings (76.5 points), for manufacturers of footwear and leather products (71.2 points), for manufacturers of electrical equipment (71.3 points), and for travel agencies (69.3 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.
Source: ifo Institute
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