FX.co ★ Italy Inflation Rises To 9-Month High; Producer Prices Fall At Slower Rate

Italy witnessed a notable resurgence in consumer price inflation in July, marking a nine-month high after a period of stability observed over the preceding two months. Preliminary data released by the national statistical office on Wednesday highlights these developments.

In parallel, another dataset indicated that producer prices declined at the slowest rate in thirteen months in June.

Consumer price inflation surged to 1.3% in July, up from a stable 0.8% in June. This figure slightly exceeded economists' predictions, which stood at 1.2%. This was the highest inflation rate recorded since October 2023, a month which saw prices increase by 1.7%.

The annual rate of price growth for regulated energy products accelerated significantly to 11.3% in July, up from 3.5% in June. Additionally, charges for recreational services, including cultural and personal care services, increased by 4.4%.

On the other hand, the prices of non-regulated energy products declined by 6.1%, a lesser drop compared to the 10.3% decrease seen the previous month.

Paolo Pizzolo, a senior economist at ING, commented, "Today's release confirms that base effects, mainly related to energy goods, are still the primary drivers of headline Italian inflation dynamics. This trend is likely to persist in the coming months, pushing headline inflation to around 2% by the end of the year."

When excluding energy and fresh food, core inflation remained stable at 1.9%.

Month-over-month, consumer prices rose by 0.5% in July, surpassing the anticipated 0.2% rise.

Inflation measured by the harmonized index of consumer prices (HICP) climbed to 1.7% in July, up from 0.9% in the preceding month. This was higher than the expected 1.2% growth rate.

Compared to the previous month, the HICP fell by 0.8%, which was a more modest decline than the forecasted 1.1%.

From another report by the statistical office, producer prices dropped by 2.5% annually in June, a slower decline compared to the 3.5% rise observed in May. This downward trend in prices has been ongoing since April 2023.

In the domestic market, prices were 3.5% lower in June year-on-year, while prices in the foreign market decreased by 0.8%.

On a monthly basis, producer prices increased by 0.7% in June, following a 0.3% rise in the previous month.