Price expectations in Germany continue to decline in August

Despite the overall drop, some sectors are bucking the trend. Consumer-related industries and construction have shown a slight uptick in companies planning to raise prices. Price expectations in the consumer-related services sector increased to 25.2 points, up from 20.0 points in July, driven largely by the hospitality sector, which saw a significant jump to 37.6 points from 26.7. Similarly, price expectations in the retail sector edged up slightly to 25.3 points, from 24.9 points in the previous month. The construction sector also saw a modest rise in price expectations, moving to 3.3 points from 0.9 in July, ifo said in a press release.

Timo Wollmershäuser, head of forecasts at ifo, commented on the findings: “Overall, the inflation rate in the coming months is likely to remain below the two per cent mark targeted by the European Central Bank (ECB). Energy, in particular, is significantly cheaper for consumers than it was a year ago.”

Recent data from ifo indicates a decline in overall price expectations among German companies, suggesting potential easing of inflation pressures.
The ifo price expectations index fell to 16.3 points in August, driven by reduced expectations in manufacturing and business-related services.
Consumer-related industries saw an uptick in price expectations.

However, Wollmershäuser cautioned that the core inflation rate, which excludes volatile energy prices and is considered a better indicator of underlying inflation trends, is expected to remain relatively stable at around 2.5 per cent. This level is still above the ECB’s inflation target.

In contrast to the sectors experiencing an increase, wholesalers and manufacturing companies have shown a decrease in price expectations. The index for these sectors fell to 18.9 points and 5.0 points, respectively, down from 20.4 and 7.1 in July.

The ifo price expectations index represents the net percentage of companies intending to raise their prices. A positive balance indicates more companies planning price hikes than reductions, and vice versa. The recent data suggests a mixed outlook, with some sectors anticipating higher prices while others foresee stabilisation or declines, reflecting diverse economic conditions across Germany.

As the inflation landscape evolves, businesses and consumers alike will be watching closely to see how these trends impact their costs and spending power.

Fibre2Fashion News Desk (KD)