The German Economic Research Institute (Ifo) has published the results of the German Business Survey on company price increases.
As a result, German companies have passed on only 34 percent of their higher production and purchasing costs to their customers in recent months.
Weak demand, high competitive pressure and long-term contract terms prevented companies from raising prices.
According to the survey of 6,550 companies, German companies plan to pass on 50 percent of the cost increase to their customers until April 2023.
“IT WILL LEAD TO MORE INFLATIONAL PRESSURE”
“This will likely lead to further inflationary pressure on consumer prices in the coming months,” said Ifo researcher Manuel Menkhoff.
It was notable that there was a significant difference between sectors in the pass-through of price increases to customers.
While industrial companies expect to pass on the higher purchase costs of energy and raw materials to their customers with 68%, this figure was 66% in the construction sector, 53% in the retail sector and only 36% in the service sector.