Companies are increasingly planning price increases

The proportion of companies in Germany that want to increase their prices in the coming months has increased recently. The index of the price plan rose to 15.9 points in October in July, after 14.1 in September, the Institute of Munich Ifo said on Tuesday.

Industrial companies, business-related service providers and retailers in particular are expecting an increase in prices. In contrast, price expectations have fallen in the consumer-related service sectors and in the construction industry. “In the coming months, the inflation rate is likely to rise again and reach two hundred percent at the European Central Bank,” said Ifo economic expert Sascha Möhrle.

The sectors of the economy that are related to consumers have a special role in inflation: more companies expect higher prices in retail. Price expectations there rose to 21.4 points, after 19.1 in September. However, for service providers related to consumers they have fallen to 18.5 points, after 22.0 in September. This is the lowest value since April 2021. “Due to their high wages of total costs, service providers are especially in the focus of the monetary authorities, because here the inflation is still higher at almost four percent as due to strong wage growth,” says Möhrle.

Business and service providers related to business (including wholesale) plan higher prices again: the indicator rose to 7.5 and 18.8 points, respectively, after 6.3 and 18.0 points, respectively, in September. Construction companies expect to have to reduce their prices: the indicator fell to minus 3.0 points, after minus 1.0 in September.

The points in the Ifo price expectations show what percentage of companies want to increase their prices on balance: The balance is obtained by subtracting the percentage of those who want to increase their prices increase from the percentage of companies that want to raise their prices want to lower. . If all the companies surveyed intended to increase their prices, the balance would be + 100 points; if they all wanted to lower their prices, it would be -100 points. +++