Prices in Germany Set to Surge Amid Mideast War

(MENAFN) German businesses are bracing to pass soaring energy costs onto consumers at the fastest rate in two years, as conflict in the Middle East fans inflationary pressures across Europe's largest economy, a closely watched survey revealed Monday.

The Munich-based ifo Institute reported that its price expectations indicator surged to 25.3 points in March, a sharp climb from 20.3 points in February — marking its highest reading since March 2023.

"Price pressure in Germany is noticeably growing again," said Klaus Wohlrabe, head of surveys at ifo, warning that elevated energy costs are poised to drive inflation higher in the months ahead.

The ifo Institute pinned the spike in corporate pricing intentions on dramatically higher costs for crude oil, natural gas, and electricity — commodities whose prices have been turbocharged by the prolonged Middle East conflict.

"Companies are increasingly passing on rising costs," Wohlrabe cautioned, flagging that the energy shock would ripple through the broader economy via steeper production and transportation expenses, ultimately hitting both goods and services.

The sectoral breakdown paints a stark picture of how widely the pressure has spread. Manufacturing price expectations nearly doubled, surging from 13 to 20 points, while the construction sector mirrored that leap, jumping from 10 to 20.2 points. Consumer-facing service providers registered the steepest reading of all, with expectations climbing from 25.1 to 31.6 points. Business-oriented service providers and wholesalers also flagged more aggressive pricing plans, with their indicator rising to 27 points from 24.7.

The data arrives at a delicate moment for Germany, which has been navigating sluggish economic growth while grappling with the inflationary aftershocks of prolonged geopolitical instability.

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