According to the Ifo Institute, the index measuring companies’ price expectations saw a significant jump from 25.5 points in March to 31.6 points in April, marking the highest level since January 2023. Ifo Chief Economist Timo Wollmershäuser noted that “the war in Iran is leaving its mark on the German economy. Companies are increasingly passing on rising energy costs to their customers”.
Overall, expectations across industrial sectors rose sharply. In general industry, price expectations jumped from 21.1 to 34.2 points. This surge was particularly pronounced among energy-intensive firms, where the index rose from 30.6 to 47.5 points. The chemical industry was a major contributor to this increase, with its price expectations skyrocketing from 31.8 to 61.7 points. In contrast, non-energy-intensive companies saw a much smaller increase, rising only from 19.2 to 19.8 points.
Concerns about rising consumer prices were highlighted by expectations in consumer-facing sectors, such as catering and retail, where the index climbed from 27.9 to 39.8 points.
Wollmershäuser anticipates that inflation rates are likely to climb above three percent in the coming months. However, the trend of raising prices was less evident among companies servicing other businesses. For B2B service providers, the rise in price expectations was modest, increasing only from 26.9 to 32.5 points. For example, while architecture and engineering firms showed an increase (from 11.2 to 15.2 points), consulting companies actually saw a decrease in expectations (falling from 10.3 to 6.3 points).
These Ifo price expectation points represent the net percentage of companies aiming to raise their prices. This net change is calculated by subtracting the percentage of firms planning to lower prices from the percentage planning to increase them. (A score of +100 would mean all surveyed firms plan to raise prices; a score of -100 would mean all plan to lower them). The index has been seasonally adjusted by the Ifo Institute, which measures the net intention rather than the projected magnitude of the price change itself.
