German companies are slow and do not fully pass on their increased purchase prices to their customers. In recent months, companies have passed on only 34 percent of their purchase prices, according to a survey.
According to the companies themselves, weak demand, high competitive pressure and lengthy contract terms prevented them from raising prices. However, by April 2023, they plan to increase carryover to 50 percent, according to the study of 6,500 companies published Monday by the Ifo Institute in Munich. “This is likely to lead to further inflationary pressure on consumer prices in the coming months,” said Ifo researcher Manuel Menkhoff.
Industry achieves the most
The industries differ significantly. The industry is strongly planning to pass on higher purchasing costs of energy, raw materials and pre-materials to its customers. Here the share is 68 percent. The same is true in the construction sector at 66 percent. This is 53 percent in the retail sector, and only 36 percent among service providers. In industry alone, the range is from 89 percent for shoe and leather goods manufacturers to 38 percent for beverage production.
Inflation at 1951 levels
At 10.4 percent, inflation in Germany is currently higher than since 1951. The reason for this is the Russian war against Ukraine, which has caused energy prices to rise sharply – from gas to fuel and electricity. In addition, there is a shortage of raw materials and semi-finished products in many areas, which has also contributed to inflation. For example, semiconductors, which are found in many products, have been a scarce commodity for months. Disrupted supply chains – caused, for example, by recurrent corona lockdowns in China – are also driving up prices.
Source: Krone
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