Because fewer and fewer companies want to raise their prices, the Munich Ifo Institute 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 on Thursday.
This assessment is based on the price expectations of companies surveyed by the Ifo, 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.
Still, it means that far more companies want to keep raising 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.
Against this background, the chairwoman of the Federal Association of Consumer Organizations (vzbv), Ramona Pop, spoke out in favor of abolishing VAT on certain foods such as fruit, vegetables and legumes. This would make it easier for all consumers to “eat healthily,” she told the newspapers of the Funke media group.