The Ifo price expectations index in Germany surged to 19.7 points in December, marking its highest level since April 2023 and reflecting a significant rise from 15.8 points in November. This trend spans all economic sectors, signaling a growing inclination among German companies to raise prices.
Timo Wollmershäuser, Head of Forecasts at Ifo, commented on the development: “In the coming months, the inflation rate is expected to stabilize around 2.5%, remaining above the ECB’s target level.”
The increase in price expectations was particularly noticeable among consumer-related service providers, including retailers, where the index rose to 27.1 points from 25.8 points in November. Similar upward trends were observed in manufacturing and business-related service providers, with the indices climbing to 6.9 points (from 6.7) and 22.5 points (from 19.0), respectively.
Although construction companies continue to show a tendency to lower prices, this sector also saw a notable shift. The index improved significantly from -6.2 points in November to -1.5 points in December, indicating a narrowing gap between companies lowering and raising prices.
The data underscores the ongoing pressures on prices across Germany’s economy, with companies responding to broader inflationary trends expected to persist into the coming months.