The economic research institute Ifo expects fewer price jumps for food in the coming months. The price increase plans of retailers for food and beverages fell sharply in June. “The pace of price increases should gradually slow down there,” said the Munich economic researchers on Friday. “Overall, however, the inflation rate for consumers will only drop very slowly,” said Ifo economic chief Timo Wollmershäuser.
Specifically, the Ifo indicator for price trends in the food and beverages sector fell from 61.4 to 45.6 points. In contrast, there was a much smaller decline in gastronomy and travel agencies. Manufacturers of beverages, clothing and cars are expected to see price increases.
Food prices have increased by a third
According to the Ifo, there are clear price reductions in the chemical industry and for printed products, glass and ceramics. “It may take a little time before they are passed on to the consumer,” said Wollmershäuser. There should also be falling prices for consumer electronics and construction.
The comparatively rapid rise in prices has kept consumers, companies and monetary authorities in suspense for some time. A key driver is food. Compared to the Corona year 2020, these have become more expensive in Germany by more than a third, according to data from the Federal Statistical Office.
Retailers are also feeling the effects of inflation: In May, the shops recorded price-adjusted sales that were 3.6 percent lower than a year ago, as the Federal Office announced. Only the price increases ensured that retailers had 2.8 percent more in their tills at the end of the month than a year earlier.
In food retail, real sales fell year-on-year for the 23rd month in a row, this time by 4.4 percent. Consumers are holding back or turning to cheaper products. The price increases (14.9 percent compared to the same month last year) nevertheless caused nominal sales to rise by 6.7 percent. In the short term, statisticians registered a drop in food prices of 0.3 percent in May compared to the previous month.
Import prices have fallen sharply
The fall in the prices of goods imported into Germany has accelerated. In May, import prices fell by 9.1 percent compared to the same month last year, as reported by the Federal Statistical Office. This is the strongest decline since September 2009. The Federal Office explains the decline with a statistical base effect: Because prices had risen particularly sharply in the previous year, the comparison with the then high price level is low.
The effect is particularly evident in energy imports, which were 37.6 percent cheaper in May than a year ago. Natural gas had the greatest impact on . According to the Federal Office, prices here in May were 39.7 percent below those of May 2022. Import prices also tend to influence consumer prices, on which the European Central Bank (ECB) bases its monetary policy in the euro zone. Inflation there also fell significantly in June.
Consumer prices in the euro area increased by 5.5 percent compared to the previous year, after 6.1 percent in the previous month, as reported by the Eurostat statistics office in Luxembourg. It is the lowest inflation rate since early 2022. In contrast to headline inflation, core inflation rose again without volatile prices for goods such as energy. It rose to 5.4 percent from 5.3 percent after falling in the previous two months. In the opinion of many economists, core inflation reflects basic inflation and therefore represents the inflation trend somewhat better than the overall rate.
