Price Expectations Fall Slightly
The ifo price expectations in Germany fell slightly to 15.9 points in June, down from 16.1* in May. In manufacturing and consumer-related industries in particular, somewhat fewer companies intend to raise their prices than in the previous month. “The inflation rate is therefore likely to continue its slow decline and fall below the two% mark in August for the first time since March 2021,” says Timo Wollmershäuser, Head of Forecasts at ifo.
In consumer-related businesses, price expectations fell slightly to 22.7 points, down from 23.0* in May. Price increases are expected to be less frequent, particularly among clothing and electronic household appliance retailers and in the arts, entertainment, and recreation sectors. Retailers of consumer electronics and bicycle dealers are even planning for falling prices. However, food and beverage retailers, car dealers, and the hospitality sector in particular want to increase their prices.
In the manufacturing sector, price expectations fell to 6.6 points, down from 7.4* in May. The decline has continued in the non-energy-intensive industries in particular, reaching its lowest level since November 2020 at 6.8 points. In the energy-intensive industries, the price declines have probably ended in the meantime. After 14 negative figures in a row, price expectations there have been positive again since May and were largely unchanged at 2.6 points in June.
Among business-related service providers (including wholesalers) and in the construction industry, price expectations rose to 22.8 and 1.7 points, after 21.1* and -3.9 in May. This means that for the first time since April 2023, more construction companies want to raise their prices than lower them.
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.
