Ifo: Inflation rate likely to slip below the two percent mark in August
In industry and consumer-related sectors, according to the Ifo Institute, fewer companies planned price increases in June compared to the previous month. Ifo-Conjuncture Chief Timo Wollmershauser predicted that the inflation rate should continue its decline and fall below the two-percent mark for the first time since March 2021 in August. The Ifo Barometer for price expectations in the economy decreased slightly to 15.9 points in June from 16.1 in May.
In retail trade, particularly in clothing and electrical household appliances, as well as in the arts, entertainment, and leisure industries, price decreases are less likely. In the entertainment electronics industry and the bicycle trade, price decreases are even planned. However, price increases are more likely in retail trade for food and beverages, car dealers, and the catering and hotel industries.
In the manufacturing industry, price expectations have decreased to 6.6 points, down from 7.4 in May. The decline has continued in non-energy-intensive industry sectors, reaching the lowest value since November 2020 at 6.8 points. "Price declines in energy-intensive industry sectors may have already come to a halt," the Ifo Institute stated. After 14 consecutive negative values, price expectations in these sectors have been positive since May, with a reading of 2.6 points in June.
Preliminary price expectations for business-related services (including wholesale) and the construction industry have risen to 22.8 and 1.7 points, respectively, compared to 21.1 and -3.9 in May. For the first time since April 2023, more construction companies plan to raise their prices than lower them.
The Ifo-Preiswartungen points indicate how many percentages of companies plan to raise their prices. The balance is calculated by subtracting the percentage of companies planning to lower their prices from the percentage planning to raise them. The Federal Statistical Office will release consumer price data for June later in the day. Prices rose by 2.4 percent in May, marking the first increase this year.
In line with Timo Wollmershauser's prediction, the inflation rate is anticipated to dip below the two-percent mark for the first time since March 2021 in August, as cited by the Ifo Institute. This significant decrease in inflation rate is expected to coincide with the Ifo's price expectation barometer, which decreased slightly to 15.9 points in June.
