According to the Ifo Institute, companies in Germany continued to raise their prices at the end of 2022 more than would have been necessary due to the development of inflation and its costs. "These companies have taken advantage of the situation to increase their profits strongly," said Joachim Ragnitz, deputy head of the Ifo branch in Dresden, on Tuesday. "This is especially true for companies in trade, hospitality and transport as well as in the construction industry."
In agriculture and forestry, which was one of the "inflation winners" in the summer of 2022, on the other hand, rising costs have recently had an impact. Overall, the development slowed down in the fourth quarter.
"Even though the rate remains high, the momentum of price increases has weakened somewhat compared to the third quarter," Ragnitz explained. "For consumers, there is hope that inflation has peaked." The economist pointed out that in almost all major economic sectors the so-called gross operating surpluses had risen sharply. These are corporate profits plus depreciation and other net taxes on production.
According to Ragnitz, only more competition can help against excessive price increases. The government could contribute to reducing inflation by refraining from broad-based relief for all households and limiting it to particularly poor households. "If, on the other hand, the trade unions were to prevail with their high wage demands, there would be a risk of a renewed surge in inflation."
In the public sector at the federal and municipal level, Verdi is currently demanding 10.5 percent more wages and salaries, but at least 500 euros more per month. The union is putting pressure on employers with many warning strikes.