Italy: Harmonized inflation jumps to highest level since October 2023 in July
Harmonized inflation rose to 1.6% in July, up from June’s 1.0%. July’s reading marked the highest inflation rate since October 2023 but came in below both the preliminary estimate and market expectations. Looking at the details of the release, the result was mainly driven by a slower drop in housing and utilities costs due to a fading base effect, plus stronger price growth for recreation.
Nonetheless, the trend pointed down, with annual average harmonized inflation falling to 1.8% in July (June: 2.1%). Meanwhile, consumer price inflation rose to 1.3% in July from June’s 0.8%.
Lastly, harmonized consumer prices fell 0.89% in July over the previous month, contrasting June’s 0.14% increase and marking the weakest reading since January.
Commenting on the reading, ING’s Paolo Pizzoli stated:
“[July’s] release confirms that base effects mainly related to energy goods are still proving the main driver of headline Italian inflation dynamics. As these play out over the next few months, the temporary undershooting of Italian inflation with respect to the wider euro area peers looks set to fade. […] For the time being, we’re sticking to our forecast of average headline inflation at 1.2% in 2024, with slight upside risks should wage pressures prove stickier than expected over the next few months.”