IFO Consumer-Related Price Expectations Fall Slightly

IFO price expectations in Germany fell slightly in June, by 0.2 points to 15.9. In consumer-related industries, price expectations also fell, by 0.3 points to 22.7.

• "Price increases are expected to be less frequent, particularly among clothing and electronic household appliance retailers and in the arts, entertainment, and recreation sectors."
• "Retailers of consumer electronics and bicycle dealers are even planning for falling prices. However, food and beverage retailers, car dealers, and the hospitality sector in particular want to increase their prices."
• IFO thus expects German headline inflation to decline further in the coming months, and to drop below 2% this August for the first time since March 2021.
• The IFO price expectations indicator is set up as a diffusion balance - "the balance is obtained by subtracting the percentage of companies that want to lower their prices from the percentage of those that want to raise their prices."
• German June flash CPI inflation is set to be published at 13:00BST / 14:00CET today, but individual states accounting for the vast majority of the national basked have already published their respective prints at 9:00 BST. We track headline CPI at around 2.2-2.3% Y/Y based on 89.1% of the overall basket.
• The national print will count towards the Eurozone-wide release, which is expected to come in at around 2.5% Y/Y after French, Italian and Spanish data did not surprise last week.