- Prior +3.3%
- HICP +4.1% vs +3.8% y/y expected
- Prior +3.2%
Italy’s preliminary September inflation data showed a significant acceleration in price pressures, with the consumer price index rising 4.2% y/y, up from 3.3% in August. On a monthly basis, CPI increased 0.7%. The acceleration was primarily driven by energy, with regulated energy inflation rising from 18.6% to 25.9% and non-regulated energy inflation accelerating from 17.0% to 22.2%. Unprocessed food prices also picked up notably, while services inflation accelerated in both recreation and transport-related categories.
The monthly increase was again dominated by energy, with regulated energy prices rising 5.9% and non-regulated energy prices increasing 4.4%. Unprocessed food prices also rose 2.2% on the month. As a result, inflation excluding energy increased to 2.0% y/y, from 1.7% previously, while core inflation, excluding energy and unprocessed food, accelerated to 1.7% from 1.5%. This suggests that while the energy shock remains the main driver of headline inflation, some underlying price pressures are also moving higher.
The harmonised HICP measure rose 4.1% y/y, up from 3.2% in August, while the monthly increase was 2.0%. For the ECB, however, the key question is whether the energy shock remains contained or begins to generate stronger second-round effects across the economy. Policymakers are therefore paying particular attention to core inflation, wages and services prices. So far, policymakers haven’t been seeing clear signs of second-round effects.
Chart: Italy HICP Y/Y
This article was written by Giuseppe Dellamotta at investinglive.com.