| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | 0.2% | 0.2% | 0.2% |
| Year over Year | 5.3% | 5.3% | 5.3% |
Highlights
Inflation continued to fall in September, providing a ray of good news as the economy teeters on the edge of recession in the third quarter.
The consumer price index rose by 0.2 percent last month, bringing annual inflation down to 5.3 percent from 5.4 percent in August. Both the monthly and year-over-year results were in line with consensus estimates and confirmed the flash data released late last month.
That's the lowest inflation rate in over a year and well below the peak of 11.8 percent touched in October and November of 2022.
The core inflation rate declined to 4.6 percent last month from 4.8 percent in August, also in line with the flash estimate.
Food prices continued to fall, with unprocessed food inflation falling to an annual rate of 7.7 percent from 9.2 percent, while processed food inflation retreated to 8.9 percent from 10.0 percent in August.
Goods prices inflation fell to 6.0 percent from 6.3 percent in August, but service price inflation a component closely watched by the European Central Bank ticked higher, to 4.1 percent from 3.6 percent.
The HICP rose by 1.7 percent last month (unrevised from the flash estimate), leaving the annual rate at 5.6 percent (slightly below the flash estimate of 5.7 percent), up from 5.5 percent in August. The sharp rise in the monthly HICP stemmed from clothing and footwear at the end of the summer sales, which is not captured by the national non-harmonised series.
The rise in HICP, which feeds into the estimate of eurozone inflation, comes amid a sense of differing opinions emanating from the ECB's governing council. According to minutes of the September rate setting meeting, the decision to raise rates by 25 basis points"was generally seen as a close call."
Italian government officials have publicly criticised the ECB's extended tightening cycle, with deputy Prime Minister Matteo Salvini accusing President Christine Lagarde of living on Mars after ECB lifted interest rates by 25 basis points in September.
The latest data leave the RPI at minus 4 and RPI-P at zero, suggesting that the Italian economy is performing largely within expectations.
The consumer price index rose by 0.2 percent last month, bringing annual inflation down to 5.3 percent from 5.4 percent in August. Both the monthly and year-over-year results were in line with consensus estimates and confirmed the flash data released late last month.
That's the lowest inflation rate in over a year and well below the peak of 11.8 percent touched in October and November of 2022.
The core inflation rate declined to 4.6 percent last month from 4.8 percent in August, also in line with the flash estimate.
Food prices continued to fall, with unprocessed food inflation falling to an annual rate of 7.7 percent from 9.2 percent, while processed food inflation retreated to 8.9 percent from 10.0 percent in August.
Goods prices inflation fell to 6.0 percent from 6.3 percent in August, but service price inflation a component closely watched by the European Central Bank ticked higher, to 4.1 percent from 3.6 percent.
The HICP rose by 1.7 percent last month (unrevised from the flash estimate), leaving the annual rate at 5.6 percent (slightly below the flash estimate of 5.7 percent), up from 5.5 percent in August. The sharp rise in the monthly HICP stemmed from clothing and footwear at the end of the summer sales, which is not captured by the national non-harmonised series.
The rise in HICP, which feeds into the estimate of eurozone inflation, comes amid a sense of differing opinions emanating from the ECB's governing council. According to minutes of the September rate setting meeting, the decision to raise rates by 25 basis points"was generally seen as a close call."
Italian government officials have publicly criticised the ECB's extended tightening cycle, with deputy Prime Minister Matteo Salvini accusing President Christine Lagarde of living on Mars after ECB lifted interest rates by 25 basis points in September.
The latest data leave the RPI at minus 4 and RPI-P at zero, suggesting that the Italian economy is performing largely within expectations.
Market Consensus Before Announcement
No revisions are expected, leaving a 0.2 percent monthly rise in prices and a 5.3 percent yearly inflation rate, down a tick from the final August print.
Definition
The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI provide widely used measures of inflation. A provisional estimate, with limited detail, is released about two weeks before the final data are reported.
Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as the Italy where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. As a member of the European Monetary Union, Italy's interest rates are set by the European Central Bank.
Italy like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies. The core CPI, which excludes fresh food, is usually the preferred indicator of short-term inflation pressures.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
Italy like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies. The core CPI, which excludes fresh food, is usually the preferred indicator of short-term inflation pressures.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
