In Germany, fewer companies are currently planning price increases. The Ifo Price Expectations index dropped in August to 21.2 points, down from 21.6 in July. This suggests a slight easing of pricing pressure over the next three months.
However, this dip is tempered by the fact that crude oil prices, and particularly the market prices for natural gas and electricity, have risen significantly since the beginning of August. Tiphaine Wibault, an Ifo researcher, warned that “the longer the war in the Middle East continues and energy prices remain high, the more consumer prices for food, services, and goods are likely to rise in the medium term, as companies pass on increased costs with a delay.”
In August, price expectations decreased across many economic sectors. For energy-intensive industrial companies, the indicator fell from 21.3 to 18.7 points, while non-energy-intensive companies saw expectations drop from 22.7 to 19.0. Retail firms also slightly reduced their price outlooks, moving from 31.4 to 30.0 points. In contrast, service providers reported a slight rise in their price expectations, increasing from 19.1 to 20.9 points.
Overall, inflation is expected to remain high in the coming months. According to the Ifo Institute, the annual inflation rate is projected to stand at 2.8 percent in 2026 and climb to 3.0 percent in 2027. The energy price shock is expected to manifest slowly in the core inflation rate (inflation excluding energy), which is projected to increase by 2.2 percent this year and 2.9 percent next year.
