Italy: Inflation rises to highest level in almost three years
November 16, 2011
In October, consumer prices rose 0.6% over the previous month, which was up both from the flat reading recorded in September and the 0.2% rise recorded in the same month last year. Accordingly, annual inflation rose from 3.0% in September to 3.4% in October which, although in line with market expectations, marked the highest level since October 2008. The reading was mainly the result of the 21% increase in value added tax (VAT), which was included in the government's austerity plan approved in August and became effective from 17 September. The core inflation index, which excludes more volatile categories such as unprocessed food and energy, rose 0.4% over the previous month. As a result of the monthly pick-up, annual core inflation rose from 2.4% in September to 2.5% in October, the highest level since December 2008. Finally, annual HICP inflation inched up from 2.5% in September to 2.6% in October. The Bank of Italy sees HICP inflation averaging 2.7% this year, before dropping to 1.9% next year.
Author: Armando Ciccarelli, Head of Data Solutions