Due to planned price increases by many companies, the Munich Ifo Institute expects inflation to rise again.
“In the coming months, the inflation rate is likely to settle at around 2.5 percent, which is above the European Central Bank’s target,” said Ifo economics chief Timo Wollmershäuser. The reason is that so many companies are planning higher prices than they were last in April. The Ifo indicator of price expectations rose to 19.7 points in December, after 15.8 points in November.
This will be noticeable when shopping at the checkout. Among consumer-related service providers, including retail, the proportion of companies that want to increase their prices is, at 27.1 points, even higher than the average for all sectors of the economy.
As part of their economic surveys, the economic researchers also ask thousands of companies every month about their pricing plans. The index numbers are balance values: the larger the proportion of companies that want to increase their prices, the higher the indicator rises. If more companies want to reduce their prices than increase them, the balance values are negative. The Ifo Institute does not ask about the amount of the planned price change. (dpa)