Price expectations decline
Noticeably fewer companies are planning to raise prices in the next three months. This is shown by the latest survey conducted by the Ifo Institute. For the economy overall, Ifo price expectations fell to 29.1 points in February. In January, they were still at 35.2 points.
“Companies have already passed on a large part of the increased costs to their customers, and at the same time demand is weakening in almost all sectors of the economy,” reports Timo Wollmershäuser, Ifo’s head of economic activity. Thus, according to Wollmershäuser, inflationary pressure should ease in the coming months.
Price expectations in the industries
In the retail sector, fewer companies are planning to increase their prices. However, price expectations in the sector are noticeably higher than in other areas of the economy.
Service companies are also planning to lower their prices. However, prices in tourism remain high. For example, Ifo price expectations for tour operators fell to 63.2 points, down from 70.2 points in January.
In the manufacturing sector, fewer companies want to raise their prices. A large proportion of companies in the chemicals and paper industries already expect sales prices to fall.
In the construction sector, Ifo price expectations fell to 18.7 points. This is said to be the lowest value since April 2021.
As the Ifo Institute explains, the points in the Ifo price expectations indicate what percentage of companies want to increase their prices on balance.
Material bottlenecks are reducing
In industry, material bottlenecks have also weakened. The Ifo Institute reported that 45.4 percent of the companies surveyed complained of material shortages in February. This is the lowest figure since April 2021, it said.
Klaus Wohlrabe, head of the Ifo surveys, shares that many companies continue to have problems starting production as intended. However, there are currently no signs that material shortages could worsen again.