Price Expectations Have Risen Again

The ifo price expectations in Germany rose to 17.8 points in July, up from 16.1* points in June. In manufacturing in particular, somewhat more companies intend to raise their prices than in the previous month. Consumer-related businesses, on the other hand, are less likely to plan price increases. “The inflation rate will therefore probably to decline further in the coming months,” says ifo economic expert Sascha Möhrle.

The indicator fell among consumer-related service providers to 20.0 points, down from 21.9 points* in June, the lowest level since April 2021. “Due to its high wage share of total costs, this sector is particularly in the focus of the currency regulators, as inflation is still at its highest here at just under 4% as a result of the strong wage increases,” says Möhrle. Food retailers reported a significant increase to 55.2 points, up from 34.3* points in June. In the rest of the retail sector, however, fewer companies are planning to raise prices (22.7 points, down from 23.3* in June).

In the manufacturing sector, price expectations rose to 7.3 points, up from 6.6 points in June. By contrast, fewer companies in the business-related service sectors (including wholesale) and the construction industry intend to raise their prices. In these areas, the indicator fell to 20.6 and 0.9 points respectively, down from 22.5* and 2.1* points in June.

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