Italy: Harmonized inflation falls in August
Latest reading: Harmonized inflation edged down to 1.3% in August from July’s 1.6%. The reading was broadly in line with market expectations. Looking at the details of the release, food and non-alcoholic beverages prices increased at a more moderate pace in August compared to the previous month, while transportation prices fell.
Accordingly, the trend pointed down, with annual average harmonized inflation coming in at 1.4% in August (July: 1.8%). Meanwhile, consumer price inflation edged down to 1.1% in August from the previous month’s 1.3%.
Finally, harmonized consumer prices declined 0.21% over the previous month in August, a softer fall than the 0.89% drop recorded in July.
Outlook: In 2024, our panelists forecast inflation to both average below 2023’s level and the ECB’s 2.0% target. High interest rates, decreased price pressures for energy and a high base of comparison will support disinflation. That said, strong wage pressures and the initiation of the ECB’s easing cycle will provide upward pressure in late 2024 and beyond. Energy price spikes remain an upside risk.
Panelist insight: Commenting on the release, ING’s Paolo Pizzoli stated:
“Wage developments look set to remain a relevant variable for inflation developments over the next few quarters, as a good chunk of expired contracts is still up for renewal. In June, hourly wages grew at a 3.6% yearly pace. It seems reasonable to expect that this aggregate measure will move up over the second half of 2024, contributing to bringing headline inflation gradually up as we approach the end of the year.”