Global| Sep 13 2007Subdued Inflation in Italy
Summary
Italy shows Yr/Yr inflation trends that are under the ECBs ceiling pace, at 1.7% compared to a 2% ceiling. The HICP is contained below 2% for both the 3-month and 6-month periods. But for Italys national inflation measure inflation [...]
Italy shows Yr/Yr inflation trends that are under the ECB’s ceiling pace, at 1.7% compared to a 2% ceiling. The HICP is contained below 2% for both the 3-month and 6-month periods. But for Italy’s national inflation measure inflation is showing a bit more kick. Its overall inflation rate on its national measure is 1.6% y/y, the same as for its ex-tobacco reading. But over three and six months, inflation is in the 2% to 2.5% range with both measures accelerating to 2.5% over three months.
Even so, Italy’s diffusion measures do not confirm that this is much of an issue. For three months diffusion, which looks at the breadth of these trends, finds inflation to be accelerating in as many categories as it is decelerating with a neutral 50% diffusion reading. Over 6 months, diffusion is higher at 58.3%, but that is still not an enormous reading. Even with that diffusion reading national ‘headline’ inflation for 6 months is at 2% largely because one of the falling categories for inflation, communications, saw prices fall at an outsized 12.7% (annual rate).
While Italy may have some of the same lurking inflation France has reported, the trends do not seem to be as entrenched. In terms of the HICP measure, the one we care for the most, inflation is still in very good shape. In these numbers we are probably seeing some of the impact of Italy’s weak economy.
| Mo/Mo % | Saar % | Yr/Yr | |||||
| Aug-07 | Jul-07 | Jun-07 | 3-Mo | 6-Mo | 12-Mo | Yr Ago | |
| HICP Total | 0.2% | -0.1% | 0.3% | 1.5% | 1.6% | 1.7% | 2.3% |
| Core | #N/A | 0.0% | 0.1% | #N/A | #N/A | #N/A | 1.6% |
| CPI | |||||||
| All | 0.1% | 0.2% | 0.3% | 2.5% | 2.0% | 1.6% | 2.2% |
| CPI ex Tobacco | 0.1% | 0.3% | 0.2% | 2.5% | 2.0% | 1.6% | 2.1% |
| Food | 0.4% | 0.4% | 0.1% | 3.5% | 2.9% | 2.4% | 2.2% |
| Alcohol | 0.6% | -0.7% | 0.4% | 1.4% | -0.2% | 2.3% | 5.1% |
| Clothing & Shoes | 0.2% | 0.2% | 0.1% | 1.5% | 1.2% | 1.3% | 1.2% |
| Rent & Utilities | 0.2% | 0.0% | 0.3% | 2.2% | 0.7% | 1.2% | 6.1% |
| Housing &Furniture | 0.2% | 0.2% | 0.2% | 2.5% | 3.5% | 2.7% | 1.6% |
| Health Care | 0.2% | 0.1% | -0.2% | 0.0% | 0.2% | -0.1% | -0.1% |
| Transport | -0.7% | 0.6% | 0.9% | 3.0% | 4.7% | 1.4% | 3.3% |
| Communication | 0.0% | 0.0% | -1.0% | -3.9% | -12.7% | -8.4% | -4.1% |
| Recreation &Culture | 0.3% | 0.1% | 0.2% | 2.7% | 0.3% | 1.0% | 0.5% |
| Education | 0.1% | 0.2% | 0.2% | 2.4% | 2.7% | 2.1% | 3.0% |
| Restaurant & Hotel | 0.3% | 0.3% | 0.3% | 3.9% | 4.2% | 3.2% | 2.2% |
| Other | 0.3% | 0.2% | 0.1% | 2.3% | 3.2% | 2.3% | 2.9% |
| Diffusion | 50.0% | 58.3% | 41.7% | ||||
| Diffusion: Compared to | 6-mo | 12-mo | Yr-Ago | ||||
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
