More businesses in Germany are planning to significantly raise their prices. According to the Institute for Forecasting (Ifo), the indicator for price expectations rose sharply from 25.5 points in March to 31.6 points in April, reaching its highest level since January 2023. Ifo Chief Economist Timo Wollmershäuser stated that the “Iran war is leaving its mark on the German economy, and companies are increasingly passing on rising energy costs to their customers”.
The increase is particularly visible within the industrial sector, where price expectations rose significantly from 21.1 to 34.2 points. For energy-intensive companies, the jump was even more dramatic, moving from 30.6 to 47.5 points. The chemical industry contributed heavily to this rise, experiencing a surge in expectations from 31.8 to 61.7 points. In contrast, companies that are not highly reliant on energy saw a much more moderate change, increasing only from 19.2 to 19.8 points.
A strong signal of future consumer price increases was noted in consumer-facing areas, such as gastronomy and retail. For these services, the indicator climbed from 27.9 to 39.8 points.
Overall, Wollmershäuser anticipates that the inflation rate will climb above three percent in the coming months. However, fewer businesses are planning price hikes in the business-to-business services sector. Expectations here rose from 26.9 to 32.5 points. This sector includes areas like architecture and engineering firms (which saw an increase from 11.2 to 15.2 points), while professional consultants saw their price expectations actually decrease, falling from 10.3 to 6.3 points.
For reference, the points used by Ifo measure what percentage of companies intend to raise their prices. The final “saldo” (balance) is calculated by subtracting the percentage of companies that plan to lower prices from the percentage of companies that plan to raise them. If every surveyed company planned to increase prices, the saldo would be +100. If they all planned to decrease them, it would be −100. The figures are seasonally adjusted, and the Ifo Institute does not report the actual magnitude of the planned price changes.