October 23, 2021

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Germany: More and more companies plan to raise prices

Germany: More and more companies plan to raise prices

More and more companies in Germany are planning to raise prices for their goods or services, according to a survey conducted by the Ifo Institute in Munich.

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The readiness for increases can be seen especially in the wholesale trade. The indicator showing this rose in May to 65 points (in April it was still 54). It comes down to equilibrium points, which is the percentage of companies that want to raise prices minus those that want to lower them.

“Many companies are raising their prices because of higher acquisition costs,” says Klaus Wallrabe, head of survey at Ifo. In addition, there are some catch-up effects from previous price cuts during the Corona crisis.

In industry, the index rose from 32 to 37 points, in construction from 12 to 32, in retail from 24 to 36, and among service providers from 14 to 20.

Only a few sectors do not expect price increases.

“The sharp rise in the prices of many commodities will eventually affect the entire economy,” says Wallrabe. In recent months, not only crude oil and petroleum products have increased significantly, but also, inter alia, metals (such as copper), sawn wood or some plastics.

According to Eurostat, average inflation in the eurozone rose to 2.0% over the full year in May. In April it was still 1.6 percent, and at the end of last year – minus 0.3 percent. The European Central Bank (ECB) aims to keep inflation low over the medium term, but close to 2.0%.

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European Central Bank President Christine Lagarde and European Central Bank Chief Economist Philip Lane believe that rising inflation this year is a temporary phenomenon in the wake of the coronavirus pandemic. Therefore, an interest rate increase is considered unlikely at the moment.

(DPA/home), the Polish editorial board of Deutsche Welle