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Italian Inflation Continues To Fall

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Italian Inflation Continues To Fall

Italy’s National Institute of Statistsic has just published the final inflation figures for the month of May for the Eurozone’s third largest economy. These follow up on the preliminary numbers released late last month and contain no significantly consequential revisions. The benchmark Consumer Price Index (CPI) for the month has come in at 0.5% this is a moderate fall from the April number of 0.6% but exactly in line with the market expectation of 0.5%. Month on month the CPI has now entered negative territory, this month’s reading has come in at -0.1% as anticipated, for guidance April’s print showed 0.2% price growth.

Italy terms it’s Harmonized Index of Consumer Prices as the CPI EU-Norm, despite the differentiation in naming convention the calculations are as designated by the European Central Bank and as such feed directly into the overall Eurozone inflation calculation. The May year on year reading is showing a moderate fall back to 0.4% from 0.5% in April, this 0.4% reading produced no surprises for the market. Month on month the reading is now at -0.1%, this represents a significant fall from the 0.5% experienced in April but again held little surprise for a market that was anticipating the drop to -0.1%.

Removing energy from the calculation in order to get a clearer, less volatile picture it can be seen that core consumer prices in fact rose by 0.6% during the month of May, for reference the ex-energy figure was 0.9% in the month of April so the downward trend in Italian consumer prices remains very much in evidence.

Italy is currently running it’s public debt at over 132% of GDP, this is up from just over 100% since the economic crises began. This debt level is at a dangerously high level and one that is made even less manageable by the lack of inflation.

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