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Significantly fewer German companies plan to increase prices

Christian Fernsby |
Significantly fewer German companies are planning to raise their prices in the next three months, finds the ifo Institute’s latest survey.

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For the economy as a whole, the ifo price expectations fell to 29.1 points in February, down from 35.2 points in January. This marks the fifth decline in a row.

“Companies have already passed most of the increased costs on to their customers. At the same time, demand is waning in almost all economic sectors. This points to a decrease in inflationary pressure in the months ahead,” says Timo Wollmershäuser, Head of Forecasts at ifo.

“Even in retail, fewer companies are planning to raise prices. However, price expectations there are still significantly higher than in other economic sectors,” Wollmershäuser says.

Customers of stationery stores and food retailers in particular are less likely to face price increases in the future. In consumer electronics, by contrast, the indicator rose from 52.5 points to 72.7 points.

Service providers also plan to lower their prices. But in tourism, prices remain high: among tour operators, the indicator fell from 70.2 points to 63.2 points, and in hospitality, from 56.6 points to 52.7 points.

Manufacturing companies are less likely to plan on raising their prices. In the chemical industry and in the paper industry, a majority of companies expect sales prices to fall. Among beverage manufacturers, the indicator fell significantly to 56.1 points, down from 71.8 points.

On average, only a small portion of construction companies intend to pass on increased purchase prices to their customers.

Price expectations fell to 18.7 points – the lowest level since April 2021. It is here that the decline in demand for construction services seems to be most noticeable.

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.


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