KfW-Survey - Middle class expects higher costs - raises prices
A large majority of medium-sized businesses in Germany expect rising costs, but can mitigate this with price increases. According to a survey by the state-owned development bank KfW, 80% of medium-sized companies anticipate significant cost increases this year. The main drivers are higher wages and salaries, as well as energy, material, and raw material prices.
In April, 51% of companies reported that their labor costs would increase, with 14% expecting an increase of more than 10%. Due to high inflation in recent years, trade unions have secured significant wage and salary increases in many industries.
Regarding materials, raw materials, semi-finished goods, and ingredients, the second largest cost block, 56% of companies expect an increase, and 20% anticipate increases of more than 10%. Additionally, 64% of medium-sized companies are preparing for higher energy costs. Energy prices have fallen again, but long-term contracts are making themselves felt.
Many medium-sized companies can cope with the burdens
However, many medium-sized companies can counteract this to some extent. More than one third (39%) of companies that expect price increases in at least one cost category have already raised the prices of their own products and services, according to KfW - on average by 11%. Another third (33%) are planning price increases. Companies are also working on improving their energy efficiency. "A good piece of news is that most medium-sized companies report that they can cope with the higher cost burdens," says KfW Chief Economist Fritzi Köhler-Geib.
48% of companies stated in the survey that they could permanently shoulder the higher costs, while an additional 21% reported that the increased costs would have only minor impact. 14% declared that they were financially overburdened due to the additional burden.
The KfW Small and Medium Enterprise Panel has been surveying small and medium-sized enterprises with an annual turnover of up to 500 million Euros regularly since 2003. The current survey, which took place between the 15th and 25th of April, involved 2795 companies. The data is representative, according to KfW.
- Despite the anticipated inflation in energy, material, and raw material prices in Germany, as reported by KfW Group, many small and medium-sized enterprises are preparing to mitigate the increases by improving their energy efficiency.
- The cost block of materials, raw materials, semi-finished goods, and ingredients, which accounts for the second largest expense for these companies, sees 56% expecting an increase, with 20% anticipating increases exceeding 10%, according to the survey conducted by KfW Group in Frankfurt am Main.
- In response to the rising costs, a significant number of small and medium-sized enterprises in Germany, as indicated by KfW Group, have already increased their product and service prices or are planning to do so, with an average increase of 11%.
