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Signs of Inflation In Italy

James Boston
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Signs of Inflation In Italy

There is a slight glimmer of price growth activity in the Italian economy according to the latest round of inflation data published this morning. The consumer side of the economy has posted some welcome increases in prices while the production side has at least managed to stem the fall. The September Producer Price Index (PPI) has been reported as having not changed since the August readings, the month on month figure still stands at 0.0% but this needs to be viewed in the light of analysts expectations for a fall of -0.2%. In a similar vein the year on year PPI once again remains at -1.7% meaning the expected fall to -2.0% has failed to materialise.

Consumer price inflation has been published in preliminary format for the month of October, although subject to later revision the data so far points to the shrugging off of deflation. The month on month Consumer Price Index (CPI) has been reported as a 0.1% growth in prices, although weak this still represents a strong reversal of last month’s -0.4% reading, consensus estimates suggested an improvement to just -0.2%. Year on year the CPI figure has also reversed itself out of negative territory, the latest showing is 0.1% compared to a reading of -0.2% in September, this has more or less met the market’s consensus estimate. On an EU normalised basis the news gets better again, the year on year number is now at 0.2% compared to a September contraction of -0.1%, this increase is brought a positive surprise to the markets as no change had been expected. There was one anomalous reading however in the form of the month on month EU normalized figure, this is currently showing at 0.3% but compares to a September number of 1.9% price expansion.

Despite the pick up in price growth activity in the Italian economic data this morning there was one troubling announcement. The latest employment release is showing that Unemployment rose during the month of September, the official rate now stands at 12.6% compared to the revised August reading of 12.5%, markets were disappointed due to the consensus prediction for a drop in the rate to 12.4% for the month.

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