The price expectations of companies fell in August – but only slowly. As the ifo Institute reports, many sectors will continue to raise prices.
Inflation in Germany is likely to fall further. In August, the price expectations of companies fell to 14.7 points after 16.3 points in July, the ifo Institute announced today. The points indicate what percentage of the companies want to increase their prices on balance. “The drop in inflation will be tough,” concludes Ifo economics chief Timo Wollmershäuser.
The balance is arrived at by subtracting the percentage of companies that want to lower their prices from the percentage of companies that want to raise their prices, the statement said. However, the ifo Institute does not ask about the amount of the planned price change.
Many retailers and innkeepers want to raise prices
However, contrary developments are hidden behind the average, the ifo economists emphasized: Among retailers, for example, the balance of price expectations only fell from 34.9 points in July to 33.5 points. In gastronomy, it fell from 47.8 to 46.6 points, in retailing with food and beverages from 55.3 to 55.1 points.
Many car manufacturers are also still planning to raise their prices, the balance here is 21.6 points. The service providers as a whole also want to demand more money from their customers: However, the price expectations have continued to decline and fell from 27.0 to 23.7 points.
Hardly any price increases in industry
In industry, the balance of price expectations fell from four points to 3.7 points. The price increase in industry has “probably almost stopped,” says Wollmershäuser.
For paper manufacturers, on the other hand, the balance is minus 48.1 points, so price reductions are to be expected. Somewhat more price cuts are also pending in construction, with price expectations falling from minus 8.3 to minus 10.0 points.
inflation expectations of consumers pick up slightly
While companies’ price expectations are falling slightly, consumers in the eurozone are becoming more pessimistic about the inflation rate again: According to a survey by the European Central Bank (ECB), their medium-term inflation expectations have risen slightly. On average (median), they assumed in July that the inflation rate would be 2.4 percent in three years, the ECB announced today. In June they had expected 2.3 percent.
The ECB would thus continue to miss its inflation target of two percent in three years, which it is aiming for as ideal for the economy of the 20-country community. In August, the inflation rate in the euro zone was 5.3 percent. In the survey, consumers maintained their expectations for a twelve-month period: as in June, they also expected a rate of 3.4 percent in July.
Around 14,000 consumers from Belgium, Germany, Spain, France, Italy and the Netherlands take part in the monthly consumer survey. The results flow into the monetary policy considerations of the euro watchdog. The ECB’s next interest rate meeting will take place next week on September 14 in Frankfurt.