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More German companies in the trade sector want to raise prices

There are once again more German companies in the trade sector that want to raise their prices. The ifo price expectations nevertheless fell slightly overall to 15.6 points in November, down from 16.0 points in October. This is due primarily to the manufacturing industry and service providers. 'In the coming months, the inflation rate is expected to pick up somewhat and be above the two percent mark of the European Central Bank,' says Timo Wollmershäuser, Head of Forecasts at ifo.


Photo: Dreamstime.

Price expectations in retail rose to 26.4 points, up from 21.9 points in October. By contrast, price expectations in the consumer-related service sectors continued to decline, falling to 15.8 points, down from 18.5 points in October. This is the lowest level since March 2021 and only slightly higher than the average balance in the years 2005 to 2019 (14.6 points). 'The decline among service providers is good news for the further development of inflation, as the rise in prices was the most important driver of inflation there until recently due to their high share of wage costs,' adds Wollmershäuser.

'However, a number of special effects will ensure that inflation remains initially above 2% in the coming year. The increase in the CO2 price for gasoline, heating oil and gas alone, as well as the price increase for the Deutschlandticket, postage and private health insurance, will raise inflation by 0.3 percentage points.'

Price expectations in manufacturing and among business-related service providers fell to -6.6 points and 21.6 points respectively, down from 7.1 points and 22.0 points in October in construction, there was a decline from -3.9 points in October to -6.7 points, hence there are more construction companies that want to reduce, rather than increase, their prices.

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.

More information:
IFO
www.ifo.de

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