German companies plan to increase their prices again. The Ifo Institute’s index of price expectations has risen from seasonally adjusted 15.8 points in November to 19.7 points in December, as the institute announced on Thursday. This is the highest value since April 2023.
All sectors of the economy contributed to this increase. “In the coming months, the inflation rate is likely to settle around 2.5 percent and thus above the European Central Bank’s target” said Ifo Chief Economist Timo Wollmershäuser.
According to the Ifo Institute, the price expectations of consumer-oriented service providers, including individual retailers, rose to 27.1 points, from seasonally adjusted 25.8 points in November. Similarly, in the manufacturing sector and among corporate-oriented service providers (including wholesalers), the indicators increased to 6.9 and 22.5 points, from seasonally adjusted 6.7 and 19.0 points in November. In the construction industry, more companies still plan to lower their prices than to increase them, but the indicator rose significantly to minus 1.5 points, from seasonally adjusted minus 6.2 in November.
The points on price expectations show how many percent of companies, on balance, plan to increase 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 increase them. If all surveyed companies intended to increase their prices, the balance would be at +100 points. If all of them planned to lower their prices, it would be at -100. The Ifo Institute, according to its own statements, does not ask about the planned size of the price changes.