The ifo price expectations index dropped from 21.6 to 21.2 points in August. Energy-intensive manufacturers cut their pricing plans sharply, while service providers raised their price expectations slightly.
The ifo price expectations index fell to 21.2 points in August, down from 21.6 in July. The index tracks how many companies plan to raise prices over the next three months. Among energy-intensive manufacturers the reading dropped from 21.3 to 18.7 points, and among other manufacturers from 22.7 to 19.0 points. Retailers eased slightly from 31.4 to 30.0 points, while service providers rose from 19.1 to 20.9 points.
The ifo Institute attributes the overall easing partly to lower crude oil prices. For 2026 the researchers still expect an inflation rate of 2.8 percent, rising to 3.0 percent in 2027. Core inflation, which excludes energy, is projected at 2.2 percent this year and 2.9 percent next year. The drop in price expectations therefore affects the short-term outlook more than the medium-term inflation forecast.
Since early August, market prices for natural gas and electricity have risen again sharply, partly due to the ongoing conflict in the Middle East. ifo researcher Tiphaine Wibault warns that higher energy costs tend to feed through into consumer prices for food, services and goods with a delay. Whether the current easing in pricing plans holds therefore depends heavily on how energy prices develop from here.
What this means for decision-makers
- Recalculate fourth-quarter pricing using current energy costs, not just the August index reading.
- Watch service prices closely, since expectations there rose against the overall trend.
- Build a buffer for rising winter gas and electricity costs into your planning now.
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