A slightly lower number of businesses are planning to raise their prices. The Ifo price expectations dropped slightly in May to 30.3 points, down from 31.3 in April.
Ifo researcher Tiphaine Wibault noted that while price pressure is easing somewhat, producers’ and consumer prices are expected to rise noticeably in the coming months. She explained that higher energy costs and scarcer raw materials are increasing production expenses, which companies will pass on to their customers. Despite the strong increase in price expectations recorded in March and April, the current level remains high.
Price expectations have decreased slightly among service providers and in retail, moving from 27.2 and 54.3 points, respectively, in April to 25.0 and 48.7 in May. Similarly, in the manufacturing sector, the indicator fell from 34.4 to 32.0 points. The decline in price pressure is particularly evident among energy-intensive companies, where the indicator dropped from 47.4 to 41.8 points. Conversely, price expectations rose slightly among non-energy-intensive businesses, increasing from 29.9 to 30.7 points.
The points utilized in the Ifo price expectations indicate the percentage of companies planning to increase their prices on a net basis. This net figure is calculated by subtracting the percentage of companies planning to lower prices from the percentage intending to raise them. If all surveyed companies intended to raise their prices, the net would be +100 points; if all intended to lower them, the net would be -100. The net figure has been seasonally adjusted. The Ifo Institute does not ask about the specific magnitude of the planned price change.
