Businesses want to raise prices again in trade. According to the Munich Ifo Institute, price expectations decreased slightly to 15.6 points in November, after 16.0 in October.
This is mainly due to the manufacturing industry and service providers, said Ifo Chief Economist Timo Wollmershäuser. “In the coming months, the inflation rate is likely to rise and be above the European Central Bank’s two percent target” he said.
In retail, price expectations rose to 26.4 points, after 21.9 in October. There was a significant increase in food and beverages to 50.8 points, after 39.7 in October.
Price expectations in the consumer-oriented service sectors, on the other hand, continued to decline and reached 15.8 points, after 18.5 in October. This is the lowest level since March 2021 and only slightly higher than the average balance in the years 2005 to 2019 (14.6 points). “The decline in the service sector is a good news for the further development of inflation, as it was the most important inflation driver due to its high labor cost component until recently” said Wollmershäuser.
“However, a series of special effects will ensure that inflation remains above two percent next year.” The increase in the CO2 price for gasoline, heating oil, and gas, as well as the devaluation of the Germany ticket, the postal service, and private health insurance, would increase inflation by 0.3 percentage points.
In the manufacturing industry and corporate services, price expectations decreased to 6.6 and 21.6 points, after 7.1 and 22.0 in October. In the construction industry, the decline was to -6.7 points, after -3.9 in October, indicating that more construction companies plan to reduce their prices than increase them.
The Ifo price expectations points show the percentage by which companies plan to change their prices: The balance is calculated by subtracting the percentage of companies that plan to lower their prices from the percentage of those that plan to raise them. If all companies surveyed plan to raise their prices, the balance would be +100 points, and if all plan to lower them, it would be -100.