Inflation already at 12.7 percent: almost all retailers are planning price increases for groceries

Inflation already at 12.7 per cent
Most retailers are planning price increases for groceries

Life in Germany is now so expensive that low-income families give up on buying food in order to afford energy. For the moment, there is no relief in sight. According to an Ifo survey, retailers want to keep raising prices.

In the coming months, Germans will have to adjust to further increases in food prices. Almost all retailers are planning higher prices, according to an Ifo Institute survey. The corresponding barometer for food and beverage retailers’ price expectations was 98.9 points in June. The dots in the Ifo price expectations indicate what percentage of companies want to raise their prices. According to the survey, this is also true for the majority of other retail sectors: price expectations have risen to 78.6 points from the previous 75.5.

“This means that inflation rates are likely to remain high for the moment,” said Timo Wollmershäuser, head of the Ifo economy, summing up the survey results. “However, there are also early signs that the inflation rate may gradually drop again over the course of the year.” For example, price expectations in some sectors of the economy whose production is upstream of consumption declined for the second consecutive time. These include industry, construction and wholesaling. Only among service providers did price expectations remain broadly unchanged.

Consumer prices rose 7.6 percent in June after the inflation rate reached 7.9 percent in May, the highest level since the first oil crisis in the winter of 1973/74. The fuel discount and the nine-euro ticket introduced by the federal government for the months of June, July and August has lightened things up slightly.

Experts predict that the inflation rate will rise again after the September deadline. The main driver of prices is energy, which has increased significantly since the Russian invasion of Ukraine. Food in June cost an average of 12.7% more than the previous year. According to a study, more than half of Germans with lower incomes therefore want to buy less food. According to the Institute for Macroeconomics and Business Cycle Research (IMK), around 52% of the workforce with a relatively low household income of up to € 2,000 net per month feels compelled to cut food due to rising prices, especially for energy.

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