Business-related service providers and retailers in Germany are planning to increase prices, new data from the ifo Institut has found.
The ifo price expectations index rose to 15.9 points in October, up from a seasonally-adjusted 14.1 in September, however in retail, the price expectations index now stands at 21.4, up from 19.1 the previous month.
Additionally, industrial companies and business-related service providers, including wholesalers, are also planning price hikes, with indicators rising to 7.5 and 18.8 points, respectively.
Consumer-related service providers
Price expectations for consumer-related service providers stood at 18.5 in October, down from 22.0 in September – this is now at its lowest level since April 2021.
This drop is significant given that these service sectors are heavily influenced by wage increases, ifo noted.
“Due to their high wage share in total costs, service providers are particularly in the focus of the monetary authorities, because inflation is still highest here at almost 4% due to the strong wage increases,” commented ifo economic expert Sascha Möhrle.
Construction firms, meanwhile, are bracing for price reductions, as indicated by a drop to -3.0 points from -1.0 in September.
“In the coming months, the inflation rate is likely to rise again somewhat and reach the European Central Bank’s two percent mark,” Möhrle added.
The ifo price expectations index reflects the balance of companies intending to increase versus decrease prices, calculated by subtracting the percentage of companies planning to lower their prices from those planning to raise them. A balance of +100 points would indicate all companies intend to raise prices, while -100 points would suggest all companies aim to lower them. Read more here.
Halloween sales
A recent study indicates that retailers in Germany are anticipating Halloween sales to reach approximately €540 million this year. This forecast reflects a growing trend among consumers who are increasingly willing to spend on Halloween festivities.
According to the report, commissioned by Handelsverband Deutschland (HDE), the German retail association, over 15% of Germans plan to allocate a budget specifically for Halloween in 2024, up from 13.5% in the previous year.
