Consumer companies limit cost passes

The European Central Bank (ECB) found that nearly 90% of consumer-facing companies are only partially passing on higher costs to customers, showing a mix of strategies to manage rising expenses.

Survey details and timing

The ECB’s Economic Bulletin summarized interviews with representatives from 64 large non-financial companies in the euro area, conducted mainly between September 28 and October 7, 2026. These discussions highlight rising selling prices but also customer resistance to price hikes.

Cost drivers and contract impacts

The ECB notes that energy, transportation, and logistics costs are major sources of pressure. Companies sometimes have to renew old contracts or financial hedges, meaning cost increases can continue even if market prices stabilize.

Sectoral differences in cost transmission

About nine out of ten consumer-facing companies report only partial cost passing, compared to less than half of businesses that sell to other companies. Weak demand and competition are cited as key reasons for this difference.

Consumer behavior in France and Germany

French and German consumers are particularly price-sensitive, often seeking cheaper alternatives or delaying purchases. Spending on furniture and appliances is weak, while digital services remain more resilient to price increases.

Confidence and major purchase trends

French household confidence dropped to 80 points in October, down from 85 in September. Consumers are less likely to make major purchases, reflecting broader economic uncertainty.

Retailers balance competitiveness and costs

Retailers face the challenge of maintaining competitiveness without absorbing all cost increases. Their responses depend on product type, supplier contracts, and local competition. Price increases are not always matched by equivalent customer price tags.

Cost pressures expected to persist

While the ECB anticipates a moderation in price growth in the fourth quarter of 2026, many companies expect cost pressures to continue into 2027. Factors include expiring energy contracts, rising agricultural costs, and supplier tariffs.

Investment and employment trends

Companies in artificial intelligence, electrical equipment, defense, and aerospace report strong demand, while sectors like chemicals, textiles, and food processing struggle with costs and competition. Employment is declining overall, though specialized sectors show more demand.

Wage expectations and future challenges

Expected wage increases are around 3.0% for 2026 and 2.9% for 2027, according to company forecasts. The next challenge for French businesses is determining how to manage expected cost increases—whether by absorbing, negotiating, or passing them on to customers.