Fewer German Companies Plan to Increase Prices

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ifo| Somewhat 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 for the coming months fell to 51.5 points in October, down from 53.8 points* in September. Trade and manufacturing in particular are planning fewer increases, while price expectations are rising among service providers and in construction. “The wave of inflation has not yet broken,” says Timo Wollmershäuser, Head of Forecasts at ifo. “In particular, the high cost of energy hasn’t yet been fully passed on to consumers.” 

Food retailers continue to plan hefty price increases. Price expectations here stood at 96.7 points, down from 100.0 points in the previous month. The majority of sellers of home textiles and carpets (94.6 points), stationery (92.5 points), DIY stores (85.6 points) and sellers of consumer electronics (85.4 points) also intend to raise their prices. Only in the used car trade are prices expected to fall slightly for the first time since March 2021. Here, price expectations declined to minus 5.8 points, down from plus 25.7 points in the previous month.

The majority of manufacturing companies intend to raise their prices. However, the proportion decreased compared to the previous month. In the chemical industry, price expectations fell from 52.3 points to 33.1 points; in the paper industry, they fell from 65.3 points to 27.0 points. Price expectations are particularly high among manufacturers of clothing (83.5 points), glassware and ceramics (72.1 points), and food and animal feed (70.6 points). 
The majority of service providers also intend to raise their prices; price expectations rose to 47.0 points, up from 45.5 points. Price expectations are very high in hospitality (80.9 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.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.