ifo Price Expectations Rise Slightly
The ifo price expectations rose a little to 16.2 points in May, up from 15.2 points* in April. In manufacturing and wholesale in particular, slightly more companies plan to raise their prices than in the previous month. In consumer-related industries, by contrast, price expectations declined. “This means inflation is likely to fall again in the coming months. In August, it should drop below 2 percent for the first time since March 2021,” says Timo Wollmershäuser, Head of Forecasts at ifo.
Among consumer-related service providers and in retail, price expectations fell to 23.7 and 23.3 points, respectively, down from 26.3* and 24.4 points* in April. Price increases are less likely especially in hospitality (25.8 points, down from 32.3*), in the hotel industry (21.7 points, down from 28.4*), in drugstores (36.4 points, down from 44.6*), and in trade with electronic household appliances (29.5 points, down from 33.8*) as well as with computers and software (3.8 points, down from 18.7*). Prices are actually poised to fall in consumer electronics (−18.0 points, down from 10.0*) and among bicycle dealers (−9.2 points, down from 8.1*). Price expectations have risen in food and beverage retail (25.7 points, up from 18.2*) and in the clothing industry (23.4 points, up from 17.5*).
In manufacturing and wholesale, more companies plan to raise their prices on balance. Price expectations in these areas have risen to 7.6 and 11.2 points, up from 6.0 and 7.8 points*, respectively. Prices in construction are expected to continue to fall. However, the proportion of companies that want to lower their prices on balance has decreased slightly. Price expectations have risen accordingly to −5.2 points, up from −7.2*.
The points for the ifo price expectations indicate the percentage of companies that intend to increase prices on balance. The balance is obtained by subtracting the percentage of companies that want to lower their prices from the percentage of those that want to raise their prices. 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. The balance was seasonally adjusted. The ifo Institute does not ask about the amount of the planned price change.
* Seasonally adjusted
Publication
ifo Konjunkturperspektiven is a monthly German-language online publication that presents the latest results from ifo’s business surveys in the form of graphics and tables.
