Price Expectations Decline
Compared with the previous month, fewer companies plan to raise their prices in the near future. This is shown by the latest survey by the Ifo Institute. Ifo price expectations for the economy as a whole fell from 46.2 points in November to 40.3 points in December.
Price expectations fell most sharply in the manufacturing sector, from 53.5 to 42.0 points, and in the construction sector, from 38.4 to 28.3 points. However, price increases are also planned less frequently in trade and among service providers. In the retail sector, price expectations fell from 50.6 to 42.0 points. Among service providers, they fell from 41.4 to 38.1 points.
“This means that the rise in producer and consumer prices should gradually slow down in the coming months,” informs Timo Wollmershäuser, head of Ifo’s economic forecasts. He adds that inflation rates will remain high, however.
Strongest price increases planned for food retailers
The highest price increases intend the food retail trade. There it came to price expectations of 83.7 points after 94.7 points in November. Price expectations also fell in the drugstore industry, from 91.4 to 72.0 points. In the toy trade, they fell to 77.0 points from 94.5 points in the previous month.
In contrast, more companies in the food service sector intend to raise their prices. Price expectations rose from 57.1 to 63.4 points. The clothing retail sector saw an increase to 52.9 points, compared with 32.4 points in November. Only the paper industry is currently planning price reductions, with price expectations of minus 28.1 points after minus 10.8 points in the previous month.
As the Ifo Institute explains, the points in the Ifo price expectations indicate the percentage of companies planning to increase their prices on balance.