The head of the management consultancy Simon-Kucher, which specializes in pricing, Andreas von der Gathen. Simon Kucher
The inflation rate will remain between three and five percent for a long time, expects the CEO of the management consultancy Simon-Kucher, Andreas von der Gathen.
Germany is threatened with a dangerous stagflation – a phase without significant economic growth and rising prices at the same time.
The international consultancy Simon-Kucher specializes, among other things, in supporting companies with pricing.
Prices in Germany will continue to rise for a long time, so the inflation rate will remain high. That’s what Andreas von der Gathen, head of the management consultancy Simon-Kucher, which specializes in pricing, expects. “Prices will continue to rise, albeit not as much,” von der Gathen said in an interview with Business Insider. “Personally, I don’t expect the inflation rate to drop back to two percent any time soon.” This would be the target value of the European Central Bank (ECB) for stable prices.
Inflation has been at a historically high level since the end of the Corona crisis. As a result of the Ukraine war, it rose to a high of 8.8 percent in Germany in autumn 2022. Since then, inflation has fallen only very slowly. In June, the inflation rate was still 6.4 percent. Food and groceries in particular are driving up prices with double-digit price increases compared to the previous year.
“The inflation rate is likely to remain between three and five percent for some time, said von der Gathen.
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At the same time, economic growth remains weak. “Germany is threatened with a phase of stagnation with noticeable inflation, i.e. stagflation – and I think that is very dangerous,” said von der Gathen’s top advisor. “We are in the middle of a severe economic crisis.” This is still underestimated.
Consumers in Germany benefit from the fact that competition here is more about price than in other countries. “Consumers pay more attention to prices here.” One consequence is that basic foods have long been cheaper in Germany than in many other countries. If the prices for certain product groups drop, that will happen quickly in Germany, said von der Gathen. “But I don’t expect consumer prices to go down much overall.”
Inflation makes most losers and few winners
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The companies reacted at different speeds to their rising costs. Some would have raised their prices quickly, others only later. Regarding the dispute as to the extent to which exaggerated price increases by companies have fueled inflation, von der Gathen said: “The effect of rising profit margins is overestimated.” The same applies to companies as a whole as it does to employees and all households: “Inflation makes most people losers and few to winners.”
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Because rising prices make most people losers, von der Gathen also believes it is right for the central banks to continue to curb inflation and continue to raise interest rates.
“The phase of extremely low inflation rates and low, sometimes negative interest rates was not normal either. That’s why the shock was all the greater.” The ECB has already announced that it intends to raise its key interest rates again this month for the ninth time in a row.
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