January 11, 2023
Fewer German companies are planning to raise their prices soon than in the previous month, finds the ifo Institute’s latest survey. For the economy as a whole, the ifo price expectations fell to 40.3 points in December, down from 46.2* points in November. Price expectations fell furthest in manufacturing and construction – from 53.3* points to 42.0 points and from 38.4* points to 28.3 points, respectively. But it is also the case in trade and the service sector that fewer companies are planning to raise their prices. Price expectations here fell from 50.6 points to 42.0 points and from 41.4* points to 38.1 points, respectively. “This means that increases in producer and consumer prices are likely to gradually slow down in the months ahead. Inflation rates will, however, remain high,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Food retailers are planning to raise their prices the most. Price expectations here stand at 83.7 points, down from 94.7* points in November. Among drugstores and sellers of toys, price expectations also fell – from 91.4* points to 72.0 points and from 94.5* points to 77.0 points, respectively. In hospitality, by contrast, more companies are planning to raise their prices (63.4 points, up from 57.1* points). The same applies to clothing retailers (52.9 points, up from 32.4* points) as well as sellers of home textiles and carpets (70.6 points, up from 48.2 points). Only the paper industry is currently planning to lower its prices (minus 28.1 points, down from minus 10.8* 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 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 Germany
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