Italy’s annual consumer price inflation slowed to 1.7 percent in July, according to the latest EU-harmonised figures released on Thursday. The data, reported by Reuters, also showed that core inflation – which excludes volatile energy and food prices – remained stable, underscoring ongoing underlying price pressures amid a mixed economic outlook. This deceleration in headline inflation marks a notable development as policymakers monitor inflation trends across the eurozone.
Italy July EU harmonised CPI slows to moderate growth reflecting easing price pressures
Italy’s annual EU-harmonised Consumer Price Index (CPI) growth eased to 1.7% in July, marking a notable deceleration compared to previous months. The slowdown highlights a moderation in price pressures across key sectors, suggesting that inflationary dynamics are becoming less intense amid improving supply conditions and stabilizing energy costs. Market analysts view this as a positive signal of price stability, although underlying inflationary trends remain under scrutiny.
The core inflation measure, which excludes volatile food and energy prices, remained stable, further indicating that underlying demand-driven price pressures have not accelerated. Key factors contributing to this moderation include:
- Reduced energy price volatility
- Stabilisation in food prices
- Moderated increases in services and goods costs
| Indicator | June 2024 | July 2024 | Change (p.p.) |
|---|---|---|---|
| EU-Harmonised CPI (y/y) | 2.2% | 1.7% | -0.5 |
| Core Inflation (y/y) | 1.5% | 1.5% | 0.0 |
Core inflation remains steady signaling persistent underlying demand despite headline deceleration
Core inflation held firm at 2.5% year-on-year in July, underscoring resilient consumer demand amidst broader economic cooling. While headline inflation eased due to falling energy and food prices, underlying price pressures within services and non-energy industrial goods remained unchanged. This persistence suggests that domestic consumption and wage growth continue to support steady price increases despite external factors easing inflationary trends.
Key contributors to the stable core inflation include:
- Rising costs in housing and utilities
- Moderate increases in transportation and communications services
- Steady price growth in healthcare and education sectors
| Category | Change (YoY %) |
|---|---|
| Housing & Utilities | 3.1 |
| Transportation | 2.7 |
| Healthcare | 2.4 |
| Non-Energy Industrial Goods | 2.2 |
Policy implications suggest cautious approach as inflation dynamics show mixed signals for monetary authorities
Monetary authorities are facing a complex environment as inflation indicators present a mixed picture. While the overall EU-harmonised CPI for Italy slowed to 1.7% year-on-year in July, the stability of core inflation-excluding volatile food and energy prices-remains a signal that underlying inflationary pressures persist. This divergence highlights the challenges central banks face in calibrating policy, with risks of tightening prematurely or delaying action too long, both of which carry significant economic consequences.
In this context, policymakers are advised to consider a cautious and data-driven approach, focusing on:
- Monitoring wage growth trends as a key inflation driver.
- Assessing supply chain developments that could impact price stability.
- Evaluating external shocks, including energy price volatility and geopolitical risks.
| Indicator | July 2024 | June 2024 | Change |
|---|---|---|---|
| EU-Harmonised CPI (y/y) | 1.7% | 1.9% | -0.2pp |
| Core Inflation (y/y) | 1.5% | 1.5% |
