Companies used inflation to increase their profits, according to ifo’s analysis

By: Trademagazin Date: 2023. 03. 08. 11:24

In the fourth quarter of last year, it was also observed that some companies raised their sales prices more than justified by the increase in purchase prices in order to increase their profits – it was revealed from the analysis published on Tuesday by the Munich ifo economic research institute.

According to the analysis of the German economic research institute ifo (ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München e.V.), this trend was particularly typical among retail, catering, transport and construction companies. “These companies took advantage of the situation to significantly increase their profits. In contrast, in agriculture and forestry, which were still among the winners of inflation in the summer, rising costs have had a greater impact lately,” said Joachim Ragnitz, deputy head of ifo’s Dresden headquarters. its leader.

Based on the analysis of official German statistical data on economic performance, the research institute came to the conclusion that companies raised their prices in the fourth quarter of last year to a significantly greater extent than could have been expected due to the increase in input prices alone. ifo examined the difference between nominal and price-adjusted added value, which enables the detection of the increase in the price of final products that does not result from higher input costs.