Taking a cue from the Munich-based Economic Research Institute, Ifo, the future looks promising for those hoping for a drop in inflation rates. Ifo's top economist, Timo Wollmershäuser, hinted at a continued trend below the 2% threshold established by the European Central Bank (ECB). What's more, consumers have already experienced a notable decrease in energy costs compared to the previous year.
Thursday's release of business price expectations data from Ifo revealed a decline in companies planning to increase their prices in August. The index slid from 17.6 to 16.3 points, largely due to a decrease in industry and business-related service providers. In contrast, consumer-related sectors and construction showed a rise in intended price hikes.
Awaiting the afternoon's German Federal Statistical Office's preliminary August inflation rate estimate (14.00 CET), historically, the figure has aligned with the subsequent finale. However, July's consumer price increase, marked by 2.3%, broke the streak of decreases seen in June and May.
In light of the July upward trend in consumer prices, the Commission is keeping a keen eye on the situation, and is engaging in discussions with the ECB to strategize countermeasures. Sharing in the Ifo Institute's prediction of reducing inflation rates, the Commission continues to advocate for price stability, their primary mission.
Bonus Insights:
The Economic Research Institute, Ifo, predicts a 2.5% expected inflation rate for the upcoming months. Factors contributing to this projection include decreasing price expectations, increased price hikes in certain sectors, and easing of price pressure in some industries.
Worth Noting:
- Ifo's price expectations stood at 19.6 points in January, down from 19.7 points in December.
- Consumer-related service providers, such as hotels, travel agencies, and arts, entertainment, and recreation sectors, plan to raise their prices more frequently.
- Retailers also aim to increase prices more frequently, including toy sellers, clothing, flower vendors, and stationery stores.
- Savings can be made in specific sectors like food and beverages, electrical appliances, DIY stores, and car dealerships. Additionally, bicycle retailers plan to introduce lower prices.
