Ifo price expectations: Inflation is likely to have peaked

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Pedestrian zone in Munich: Inflation could weaken again

Photo: Wolfgang Maria Weber / IMAGO

According to an Ifo survey, the proportion of companies planning to raise their prices in the next three months has continued to decrease.

Therefore, the Munich Institute also expects a gradual decline in inflation.

“Prices are likely to continue to rise, but the pace will slow down.

Inflation has probably reached its peak and will gradually decline over the course of the second half of the year," said Ifo economic chief Timo Wollmershäuser.

This assessment is based on the price expectations of companies, whose index fell for the third month in a row and is now at 47.4 points.

That's down 5.5 points and the lowest reading in months.

The points indicate what percentage of the companies want to increase their prices on balance.

The balance is obtained by subtracting the percentage of companies that want to lower their prices from the percentage of companies that want to raise their prices.

If all companies surveyed intended to increase their prices, the balance would be plus 100 points.

If everyone wanted to lower their prices, it would be minus 100.

Food prices are likely to remain high

Accordingly, the balance means that many more companies want to continue increasing their prices than lowering them.

According to Wollmershäuser, the price expectations of companies are usually reflected in consumer prices with a few months' delay.

However, the situation differs depending on the economic sector: there are noticeable declines above all in areas whose production is upstream of consumption - for example in construction and industry.

Prices are also likely to rise more slowly in hospitality, leisure, culture and entertainment.

The situation is different in food retailing. There is no end in sight to the noticeable rise in prices here: all the companies surveyed said they wanted to raise prices.

The Federal Statistical Office intends to announce how consumer prices in Germany developed in July this Thursday.

Experts expect a decline to 7.4 percent.

The authorities in Wiesbaden had given inflation in Germany at 7.6 percent in June.

apr/dpa